ICAEW suggests confidence amongst businesses has ‘slumped’

The Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that confidence amongst businesses has ‘slumped’ as a result of ongoing Brexit uncertainty.

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The ICAEW’s Business Confidence Monitor recently revealed that confidence deteriorated from -12.3 in the fourth quarter of 2018 to -16.4 during this quarter. According to the Institute, every sector currently stands in ‘negative territory’, excluding the IT and communications industry.

Additionally, the ICAEW stated that it expects GDP growth of just 0.1% this quarter.

‘Companies at the moment are unclear about the future,’ said Michael Izza, Chief Executive of the ICAEW.

‘Directors have the exceptionally difficult task of explaining within their annual reports the impact Brexit might have on their business models and operations. Companies are making decisions now about jobs, supply chains, headquarters and asset locations – incurring significant, and possibly unnecessary, cost and upheaval.

‘We fear the destructive effects of a no deal outcome on the economy, so urge our politicians to work together to break the Brexit deadlock and help restore business confidence.’

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ICAEW warns ‘no deal’ Brexit will ‘slam brakes on UK growth’

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that a decision to reject Prime Minister Theresa May’s Brexit deal will ‘undermine the chance of stronger economic growth’ in 2019.

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In its latest economic forecast, the ICAEW predicted that the UK economy will grow by 1.6% over the coming year. It believes falling inflation, increasing domestic spending power, fiscal loosening and additional business investment in response to a Brexit deal will help to ensure the UK economy grows in 2019. However, a so-called ‘hard Brexit’ could ‘put the brakes on modest growth’, according to the Institute.

Furthermore, the ICAEW suggested that business investment will fall by 0.4% over 2018 as a whole. However, this figure could change during 2019: the ICAEW predicts that business investment will increase by 0.5% next year.

Michael Izza, Chief Executive of the ICAEW, said: ‘The need for greater stability cannot be overstated. Businesses have been unable to plan ahead, and that is a difficult environment for investment.

‘It is crucial that we avoid a disorderly exit and the activation of costly and disruptive contingency measures.

‘The potential adverse impacts on business and the wider economy could be severe, and are not helped by the decision to delay the vote on the withdrawal agreement.’

ICAEW urges employers to consider the tax implications of a seasonal party

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged employers to consider the tax implications associated with a seasonal party.

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A company end of year party can be a great way to celebrate the festive period, as well as employees’ hard work. However, there are certain conditions to consider in order to ensure the event is as tax-efficient as possible.

The total cost per employee must not exceed £150 (including VAT, accommodation and transport). This also includes the costs for employees’ guests, if they are invited.

If the party does cost more than £150 per employee, the full amount spent on the event will be liable to income tax and national insurance. The seasonal party must also be open to all employees based in that location (separate departmental parties are permissible).

The party must be an annual event: however, if you have more than one annual event (for example, a seasonal party and a summer party), the cumulative total must be £150 or less per employee.

The ICAEW added that, in regard to gifts for employees, only those deemed ‘trivial’ are exempt from tax.

UK businesses must prepare for ‘no deal’ Brexit, warns ICAEW

UK businesses must prepare for ‘no deal’ Brexit, warns ICAEW

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that businesses in the UK must prepare for a ‘no deal’ Brexit.

Research carried out by the Institute has revealed that a fifth of UK firms ‘haven’t considered the impact of Brexit’ on their business.

Many business owners believe that the UK’s exit from the EU will have ‘minimal to no impact’ on their firm, according to the ICAEW.

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It has urged businesses to put contingency plans in place in order to prepare for a ‘no deal’ Brexit, and to consider what this scenario could mean for their firm.

‘With less than a year until Britain leaves the EU, the prospect of an agreement in time is looking increasingly unlikely,’ said Michael Izza, Chief Executive of the ICAEW.

‘Even with the transition period until the end of 2020, too much still needs to be determined on how UK businesses and professional services will work both with and in Europe.’

Meanwhile, the research also suggested that 77% of businesses do not consider EU regulations to be a burden to growth, with a further 80% of firms committing to complying with EU rules once the UK has left the bloc.

ICAEW shares tips for arranging a tax-efficient seasonal party

ICAEW shares tips for arranging a tax-efficient seasonal party

An end of year party can often prove to be an enjoyable way to celebrate the festive period with work colleagues. With this in mind, the Institute of Chartered Accountants in England and Wales (ICAEW) has advised businesses to ensure that their party is as tax-efficient as possible.

Image result for work christmas partyAn annual staff party could qualify as a tax-free benefit for employees, provided certain conditions are met.

In order for a party to qualify, the total cost per head must not exceed £150 (including VAT, transport and accommodation). An event which exceeds the cost per head limit will be liable for income tax and national insurance.

In addition, the event must be held primarily for the purpose of entertaining staff, and the party must generally be open to all employees based in that location (separate departmental or divisional parties are permissible).

Commenting on tax-efficient seasonal parties, Sarah Ghaffari, Technical Manager of SME Business Tax at the ICAEW, said: ‘A Christmas party is a great way to reward staff for hard work, and as a little festive gift, HMRC allow up to £150 spend per employee, completely tax-free.

‘The Christmas tax exemption can be enjoyed by businesses of any size, so long as it’s within the £150 budget.’

Brexit ‘could increase number of business insolvencies’, ICAEW suggests

Brexit ‘could increase number of business insolvencies’, ICAEW suggests

A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that the number of businesses declaring insolvency could potentially rise as a result of the impact of Brexit on the UK economy.

Image result for insolvencyThe survey revealed that 73% of individuals working in the insolvency and business restructuring industry believe that Brexit poses the ‘biggest threat’ to businesses over the coming years. Meanwhile, 56% of those surveyed also believe that a rise in interest rates presents a risk to UK businesses.

The survey suggested that the retail sector could be the worst affected by insolvency, with 77% of respondents believing that it would be the sector most likely to experience ‘increased financial difficulty’.

Affected firms should seek early help in a bid to restructure their finances, business processes or management, the ICAEW stated.

Reflecting on the issue, Bob Pinder, Regional Director at the ICAEW, said: ‘We are in no doubt that businesses in the UK face difficult times ahead. A sharp and unexpected rise in the cost of doing business can make managing liquidity tough.

‘We believe that a change in attitudes is critical in order to successfully avoid substantially increased corporate insolvencies – confronting business issues, rather than being ashamed of them.’