Accountants exist to ensure the accuracy of financial statements and advise how to save money or boost revenue.
The coronavirus pandemic, then, with its profound and deepening impact on the economy has jolted the profession like all others.
Depending on their role, accountants have been battling to keep on top of the unprecedented flurry of government schemes and announcements, while concerns potentially mount about their own employer’s financial health. Accountants, after all, can be furloughed, too.
With cashflow tight-to-non-existent for many businesses, the temptation to cut back on accounting costs may be too much to resist. But good accountants’ services also have heightened relative value in these tough times.
Retail sales fell by 27% in the first two weeks of the UK's lockdown, resulting in the worst monthly decline on record for the sector overall last month, according to industry figures.
The British Retail Consortium said the coronavirus crisis, which has resulted in deserted high streets throughout the UK, means hundreds of thousands of jobs are at risk.
Its figures showed total sales in March fell by 4.3% compared with the same month last year, the worst performance - when stripping out seasonal distortions - since the survey began in 1995.
Yet that masked the even bigger drop of more than a quarter at the end of the survey period - the two weeks to 4 April - largely covering the time after UK went into lockdown on 23 March.
Coronavirus Job Retention Scheme
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
- designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
Banco Santander is to acquire a majority 50.1% stake in Spanish trade finance software house Mercury TFS through a €30 million investment.
The head of Santander's global payments services, Javier San Félix, comments: “The investment accelerates our plans to build a service platform for SMEs and international companies to better serve our customers worldwide. We are also helping to globalise Mercury TFS, a software company with huge potential and a team with enormous talent, by reinforcing their technical and commercial teams and complementing their already broad product range.”
You’d expect Larry Summers, former US Treasury Secretary under President Bill Clinton and adviser to President Barack Obama, to twist the knife, and he did so stylishly. By destroying “about $500bn in equity market value in course of an 11-minute speech”, President Donald Trump had set “what I believe is a new world record for presidential market value destruction”.
Fair point. Trump’s ban on flights from 26 European countries lacked rhyme or reason. It runs counter to the World Health Organization’s advice and virtually guarantees the economic hit to the US will be intensified. More to the point, the president said virtually nothing about how the US will construct its healthcare response to the pandemic.
Trump also managed to lower already-low hopes that the world’s big economies would summon a spirit of collectivism. The US president seems mostly concerned with finding someone to blame while ensuring trade tensions with the EU are set to maximum, the natural reading for why flights from the UK to the US will be permitted (for now).
The UK’s cash system will collapse without urgent legislation to protect it, according to a new study.
Panel members behind the Access to Cash Review, which published its final report a year ago, said action is needed to protect cash for as long as people need it.
They say that in the 12 months since their last review, significant issues within the country’s cash infrastructure remain.
The review was set up by ATM network provider Link to help understand how consumers use cash and how their requirements to access physical money will change over the next five to 15 years.
UK inflation in January rose to a six-month high as petrol and house prices rose, official figures show.
The Consumer Prices Index (CPI) stood at 1.8% last month, up from 1.3% in December, the Office for National Statistics said.
"The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago," the ONS said.
The rise is ahead of economists' CPI forecast of 1.6% in January.
CPI remains below the Bank of England's 2% target for inflation. Wednesday's inflation data pushed the value of the pound above $1.30. Versus the euro, the pound had started the day down 0.25% but rose back to trade flat against the single currency.
However, some analysts said that the new figures were unlikely to "move the dial" on the central bank's next decision on interest rates in March.
It’s been a tense few weeks for payroll software developers and tax agents who are trying to prepare employers for the new tax year. The software development cycle for the last 18 years has worked on the basis of having key pieces of tax information announced as part of an autumn statement, rather than being left to a spring budget.
This year was very different. When parliament was dissolved in November 2019, the civil service went into a period of election purdah until mid-December which prevented any discussions about next tax year taking place with policymakers.
If we’d had an early February budget, the timetable for revising software would’ve been tight, but just about deliverable. However, a Budget on the 11 March presents a problem.
Britain's blue-chip benchmark index finished down around 95 points lower, or 1.3%, at 7,286, going below 7,300 for the first time in seven weeks. FTSE 100 index closed decidedly in the red on Friday as January ended on a sour note and health fears continue to weigh on global markets.
Britain's blue-chip benchmark index finished down around 95 points lower, or 1.3%, at 7,286, going below 7,300 for the first time in seven weeks. Over the week as a whole, Footsie lost 3.9%.
The FTSE 250 shed over 148 points on the day to close at 21,143. Over on Wall Street, the Dow Jones lost 382 points, while the S&P 500 shed around 40 points and the Nasdaq plunged 86 points.
Chris Beauchamp, chief market analyst at online trader IG noted that few people would have suggested that a ‘major virus outbreak’ would have been seen as a big risk for markets in 2020.
There are a few special days in my career that stand out because of the historical events I was privileged to live through and comment on – memorialize, perhaps – to my colleagues. The two that stand out most: I remember the morning meeting I gave on 10 November 1989, the day after the Berlin Wall fell. Luckily in those pre-internet days I had a copy of Trotsky’s The Russian Revolution and so could get the quote right: You are bankrupt, your role in history is played out. Go out where you belong – onto the dustheap of history. I remember the day Barack Obama was elected; choking back emotion, I quoted to my colleagues the words of Martin Luther King: "I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” I thought Obama’s election signaled that that day had arrived in the US. How wrong I was.
But what am I to say to my colleagues today, Brexit Day? A day nearly as heavy with historical import, but for me, totally bereft of the hope and vision of a new, better future that these other landmark dates were imbued with. On the contrary, this seems to me to be a country rejecting the future and turning to a mythical past, and in the process committing economic and political suicide: the impoverishment of the people leading, most likely, to the dissolution of the centuries-old alliance among the several nations of the United Kingdom. This time the map is being redrawn out of fear, not out of hope.
LONDON (Reuters) - British Prime Minister Boris Johnson and U.S. President Donald Trump said they looked forward to continued close cooperation and the negotiation of an “ambitious free trade agreement” during a phone call on Monday, Johnson’s Downing Street office said.
“The prime minister spoke with President Trump, who congratulated him on the result of the general election,” a Downing Street spokesman said in a statement.
“They discussed the huge importance of the relationship between the UK and U.S., and looked forward to continued close cooperation on issues such as security and trade, including the negotiation of an ambitious free trade agreement.”
As the country contemplates the election results, people's thoughts will turn to the potential effect on their finances.
Money matters are often to the fore at this, expensive, time of year. The December election is likely to mean some changes to the pound in your pocket before the winter is out, with other changes more long-term.
Here are some of the key issues, based on the Conservative Party's manifesto, its plans before the campaign and its promises during it.
Overseas Christmas holiday boost
Those who are heading abroad for Christmas will see their holiday money go a little further.
The value of the pound improved against the US dollar and the euro when the Conservative victory became clear, and this will now have fed through to the rates at bureaux de change.
However, travelling overseas at this time of year can be very expensive, so this will only bring a little relief.
- Exchange rates: Why has the value of the pound jumped?
- Election results 2019: Analysis in maps and charts
A Budget within 100 days
The big set-piece financial event of the year had been planned for November, but was postponed as the prime minister pushed for an election.
During the campaign, Boris Johnson promised a Budget within 100 days of the polling day if the Conservatives were elected. This is likely to mean a Budget in February or March, setting any changes to taxes, benefits and allowances in time for the start of the new financial year in April.
Mr Johnson promised that a tax break for workers, through a change to National Insurance, would be confirmed in that first Budget.
The current threshold sees workers paying National Insurance contributions once they earn £8,628 a year. The Conservatives said this would rise to £9,500.
Economists at the Institute for Fiscal Studies (IFS) calculated this would be worth about £85 a year for all those with earnings above £9,500 a year.
This Budget - and any subsequent ones during this five-year Parliament - will see no income tax or VAT rises (nor any National Insurance rises), according to a promise in the Conservative Party's manifesto. However, this was described as "ill-advised" by the IFS owing to the potential lack of room for financial manoeuvre it creates.
HSBC is to bring in a single overdraft rate of 39.9% for UK customers from March 2020, as much as quadrupling the rate it charges some customers.
However, the bank is removing a £5 daily fee for going into an unarranged overdraft and introducing an interest-free £25 buffer on some accounts.
It follows a similar move from Nationwide Building Society in July.
The new annual rate comes in response to tough new rules from regulators designed to protect consumers.
But one analyst warned that steep overdraft rates could now become the "new normal".
HSBC UK currently charges rates of 9.9% to 19.9% on arranged overdrafts, but the higher rate will be applied across its whole range of accounts except for its student bank account.
The £25 buffer will apply to Bank Accounts and Advance Bank Accounts, providing leeway for those going slightly overdrawn.
HSBC said that as a result of this and the removal of the £5 daily fee for unarranged overdrafts, seven in 10 who use an overdraft would be better off or the same as a result of the changes.
But that suggests around a third could end up worse off. The bank has eight to nine million current account holders in the UK.
Madhu Kejriwal, HSBC UK's head of lending and payments, said: "By simplifying our overdraft charging structure we are making them easier to understand, more transparent and giving customers tools to help them make better financial decisions."
The move comes in response to Financial Conduct Authority's plans to shake up the "dysfunctional" overdraft market - including stopping banks and building societies from charging higher prices for unarranged overdrafts than for arranged overdrafts.
The new rules, which come into force next April, will require providers to charge a simple annual interest rate on all overdrafts and get rid of fixed fees.
But there have been concerns that banks will hike authorised overdraft charges to claw back some revenue lost from unauthorised overdraft fees.
In July, Nationwide also unveiled a new single rate of 39.9% across its adult current account range. Its changes came into force in November.
Helen Saxon, banking editor at MoneySavingExpert.com, said: "With both of the first banks to announce changes moving overdraft interest rates to around 40%, we have to wonder if this is the new normal."
The FCA has acknowledged banks may look to increase their arranged overdraft prices as a result of the new rules.
But it argues the net effect will still be better for consumers - and increased competition between providers as a result of the changes will constrain any price increases.
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: "It's disappointing to see such a hike in overdraft charges but there may be more brands coming out in the coming weeks to announce changes too.
"This shake-up is designed to make things fairer and more transparent to consumers.
"Borrowers would be wise to scrutinise any changes to their current account and look to switch elsewhere if they find that the account has lost its shine."