10
2021 – A financial overview of the year Richard Hill
Richard.Hill@aspen-waite.co.uk
With the end of the year approaching, it is a good time to take stock of where we are, how we got here, and where we are going. This is as true for businesses as it is for individuals, and it has been a very unusual year (or two!), with the economy taking shocks as big as anyone can remember, unprecedented measures being taken in our tax system, and a great deal of variation in how hard different business sectors have been hit. On top of all that, it’s not over yet. Not only can we expect more peaks and troughs in COVID-19 levels, even with the great success of vaccination programmes, but the shocks to businesses are not always felt immediately, and at times the fallout is not predictable, or even rational. We only need to look to the recent issues with petrol supply and demand, and the impact of the increases in gas prices to see that the knock-on effects can be disproportionate to the causes. Indeed, I have seen two of my gas suppliers alone go out of business as a result.
The UK economy is rallying however, and doing so faster than expected. GDP has increased 5.5% in the second quarter, after being revised up from the first estimate of 4.8%. This is favourable compared to comparable European countries, though still lagging behind powerhouses such as the USA. Similarly, those clients that have survived the past couple of years are the companies that are either robust and well managed or have found a way to benefit from the crises that we have faced. This leaves us with a positive future ahead.
These changes will all have impacts beyond the obvious, changing the cost/benefit calculations of various options available to our clients, and so we will need to be on our toes to give them the best possible advice. More increases are also rumoured to be in the works, with CGT and IHT being pegged as the most likely targets. We at Aspen Waite need to be proactive with the people who will be impacted by this, and keep our collective eye on the ball, to ensure both great client service and our own financial health.
That’s not to say we won’t be still facing some choppy waters along with our clients. Some businesses will have needed to tighten their belts, meaning less cash available to spend on marketing, advisory work, and complex projects. The impact of furlough is still being felt, particularly on things like R&D claim sizes, which can cut into our margins as advisors.
Overall, I am optimistic about the future at the moment. We might need to evolve and reposition ourselves in any number of ways, and there are some very real challenges ahead. Having said this, when I look at what we have already overcome together I am confident that we are ready to face those challenges, and end in a stronger position than we started.
As for the world of tax specifically, the outlook is unusually volatile. We are of course expecting to deal with the health and social care levy, the capital allowances super-deduction, and the increase to the corporation tax rate.
