Martin Aitken & Co Ltd News & Developments

Martin Aitken & Co: news and comment
16 minutes reading time (3232 words)

Dental Acuity Spring 2020

Commercial, finance and tax briefing for dentists. 

 Helping you to manage your finances, grow the practice profits and plan ahead.COVER2 for ppt

Click on the links below to read the full articles. If you have any queries or would like to discuss any of the issues raised in this edition, please do get in touch with Jayne Clifford, director by email: This email address is being protected from spambots. You need JavaScript enabled to view it. or by calling 0141-272-0000.

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Making investments, doing business and working in the 2020s. What will the future look like for you?

Ian Finch and Tricia Halliday provide some thoughts and perspectives on what could be up ahead for your finances, doing business and working in the next decade >more

 

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Time to start your year-end tax planning: The deferral of the Autumn Budget, originally due on 6 November 2019 will now take place in 11 March 2020, has created several problems. more>

 

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BREXIT the extended play: the drama will continue and is likely to spawn multiple spin-off shows in 2020 as the UK enters the 11- month transition period. more>     

MarDentisttin aitken at FGDP (UK) Scotland Study Day 2019: our dental accounting, tax and finance team hosted an interactive session with the 2019 BDS5’s. Find out more>

 

PerformanceScottish Dental Show 2020: save the date and meet our specialist dental team. We are delighted to support the Scottish Dental Show conference and exhibition; we will be exhibiting over both days: 24th and 25th April 2020 at Braehead Arena. more>

Business succession Oct 19Your options, the potential impacts and achieving a good outcome.  Succession planning is a must for all business/practice owners as sooner or later everyone wants or needs to retire. read article>

  

 

Making investments, doing business and working in the 2020s 

Ian Finch, Tricia Halliday and Jayne Clifford provide some thoughts and perspectives on what’s up ahead.

The MarketsMACO TPL business finance chart

2019 was a very different year for investors from 2018. Whereas 2018 saw a pattern of losses across all major markets, 2019 was the exact opposite: the red numbers that marked a year of negative performance in 2018 were replaced by black.

The world’s share markets enjoyed strong rises in 2019 (% change): 

FTSE 100 +12.1%
FTSE All-Share +14.2%
Dow Jones Industrial +22.3%
Standard & Poor’s 500 +28.88%
Nikkei 225 +18.2%
Euro Stoxx 50 +24.8%
Shanghai Composite +22.3%
MSCI Emerging Markets +11.0%

 

Despite all the trauma of Brexit politics during the year, the UK stock market posted double digit returns, as the table shows. Along with other major markets, the UK benefitted from starting at a relatively low level, following a sharp fall in the final quarter of 2018.

A point hidden in the index numbers is the performance of mid-sized UK companies – those in the FTSE 250, which sit below the top tier of FTSE 100.stocks

The strength of sterling during the year (up 4% against the US dollar and nearly 6% against the euro) had a greater impact on the multinational members of the FTSE 100 than the more domestically focused FTSE 250 constituents. The end result was that the FTSE 250 rose by 25%, more than double the increase in the FTSE 100.

The good performance of the pound – the opposite of 2018 – also took a slight edge off the returns from overseas markets for sterling-based investors. However, as the performance of the MSCI ACWI shows, in overall terms 2019 still offered greater profits for those who invested overseas. 2020 starts off with a reasonable investment outlook.

The UK is now past its era of Brexit wrangles – at least until the EU trade negotiations begin in earnest. Meanwhile the US and China have just about agreed the first stage of a trade deal and interest rates remain at rock bottom levels, with few pundits expecting any move upwards in the year.

Against that backdrop, it may seem odd to suggest investors should consider selling, but as the tax year end nears, it could be worth realising some of those 2019 gains to take advantage of your £12,000 capital gains tax (CGT) exemption and reinvesting the proceeds – even perhaps in the same funds – via an ISA or a pension.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

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Doing business in the 2020’s business growth

As we move into 2020, businesses will have to adapt in a world that places greater emphasis on sustainable business practices. People will want to work for firms that take care of their employees in terms of their physical and mental health. 

Technology will continue to be the key enabler to allow us to work flexibly, remotely and more effectively. It looks like 2020 is set to be a busy year for businesses in the UK and internationally.

Customers are becoming more environmentally aware. Companies like Beyond Meat, the maker of plant-based, protein-rich foods or Everlane, which creates clothes from recycled fibres and plastics, are gaining traction. People are trying to reduce their carbon footprint and are making buying decisions on the basis of the environmental credentials of businesses. 

As a result, businesses are responding by focusing on their environmental and sustainability policies. Many firms are adapting their CSR activities to include environmental projects in order to help drive the green agenda in local communities. As we move into 2020, this trend is likely to accelerate.

The leading accountancy bodies have also called for company reporting to address progress towards the UN’s Sustainable Development Goals (SDGs). They are attempting to establish a best practice for corporate reporting on the SDGs to enable more effective and standardised reporting and transparency on climate change, social and other environmental impacts.

This would require relevant and material disclosures about the factors that influence long term value creation (or destruction) for the organisation and society, or that have an impact (positive of negative) on the achievement of the SDGs.

On the technology side of things, machine learning and artificial intelligence (AI) are continuing to advance. The AI industry is growing and businesses have access to more powerful tools in order to create new customer experiences. For example, music-streaming service Spotify uses AI to make the listening experience more personal by creating customised play-lists for each user. See next article.business plan 2

Younger workers are putting greater emphasis on physical wellbeing and their mental health. Employers will need to adapt in order to attract the next generation of talented employees.

Flexible working and wellness programmes are high on the list of priorities for Millennials and Generation Z employees. The businesses that really embrace these new trends will attract the best people.

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Working in the 2020s

There is a lot of jargon out there around “the future of work”. What does it really mean for businesses?
There are a lot of buzzwords around like artificial intelligence (AI), machine learning, blockchain, remote working, agile working, augmented reality (AR) and various other new concepts.

As technology improves we have new opportunities to automate tasks. 

If we leverage new technology effectively, it will free us up to focus on other tasks. Understanding the future of work involves understanding how automation will play out and how that will affect the way we work in the years to come. 

There are two levels of automation at play. Assisted Intelligence, where systems and technology help us to perform a task. A good example is how GPS helps us to navigate to a destination. Autonomous Intelligence is where the technology takes the task off our hands entirely. For example - a driverless car, which navigates itself to its destination without any input from a human driver.

In any business, some tasks are completed by people and some by machines / technology. The future of work is concerned with the ever-increasing amount of work that needs to be done and the fact that work is becoming more complex. 

For example, due to increasing levels of regulation, businesses need to comply with increasingly complex rules such as GDPR or changes to taxation. Rather than hire more and more people, which is expensive, businesses need to leverage technology in order to get everything done, while still managing costs. forecasting

The future of work is all about machines and technology taking repetitive tasks off our hands so that we are freed up to do the work that machines aren’t good at. 

This includes leadership, creativity, innovation and collaboration. In order to make this transition successfully, businesses need to become learning organisations. In a learning organisation, the firm needs to focus on nurturing talent and developing new skillsets in order to create a more successful business.

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Time to start your year-end tax planning

The deferral of the Autumn Budget, originally due on 6 November 2019 will now take place in 11 March 2020, has created several problems.

It meant that the UK political parties went into the election with just a government sanctioned economic forecast produced back in March 2019 alongside Mr Hammond’s Spring Statement. Plenty had changed in the intervening eight months.

The UK Budget delay has also had a serious knock-on impact on Scotland’s local authorities who are required to set their budgets and council tax rates by 11 March, as well as Scottish Government departments, public bodies and many third sector organisations who won’t know what they can expect to receive until the Scottish budget is published.

Scottish Finance Secretary, Derek Mackay has announced that he will publish the Scottish budget on 6 February 2020 despite the uncertainty surrounding what the Scottish block grant will be for the financial year ahead.

When it comes, as the first UK Budget following an election, it could potentially include some unwelcome measures. History (and the Institute for Fiscal Studies) show that Chancellors of all hues prefer to start off with the financial ‘medicine’ and save the sweeteners until nearer the next visit to the polls.Finish Line

It therefore makes sense to begin thinking about some tax year end planning before the (Winter, now Spring) Budget arrives.

Here are some things to consider:

Pension contributions: the complex rules on tax relief for pension contributions forced the previous government into last-minute sticking plaster action to prevent NHS consultants refusing to work overtime.

Whatever long-term solution is eventually found, it seems improbable that it will involve granting more tax relief. That might mean restricting relief to a flat rate an idea that has been regularly floated. If you are a higher rate taxpayer, such a change would not be good news.

Capital gains tax: the relative tax treatment of capital gains and income has been highlighted by several parties during the election campaign.

The current regime, with an annual exemption of £12 000 and a maximum tax rate of just 20% (other than for residential property and carried interest) is generous. If you have not yet used your 2019/20 annual exemption, doing so sooner rather than later seems a sensible course of action.

ISAs: a few years ago there was talk of capping ISA contributions. With ISAs now costing over £3bn in lost income tax according to the latest HMRC figures, such Treasury brainstorming could reappear. Again, if you have not topped up your 2019/20 contributions, now is the time to act.

Corporation Tax: is scheduled to reduce from 19% to 17% from 1 April 2020. However, we have good reason to believe that this w ill delayed in the Budget. In a speech to the CBI on 18 November Boris Johnson announced that, if elected, the Conservative Party would keep the rate at 19% to provide an extra £6 billion for the NHS

For more details on these or any other tax year end actions, please talk to us as soon as possible, and definitely before that next UK Budget.EU Brexit Jun 16

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BREXIT the extended play

The drama will continue and is likely to spawn multiple spin-off shows in 2020 as the UK enters the 11-month transition period. If you’ve ever wondered what it would’ve been like to play Bill Murray in Groundhog Day then you may well have an opportunity this year, especially as we approach the deadline in December.

There continues to be significant speculation in the media about the potential impacts of Brexit on investment portfolios and the financial services sector in general. We expect this to be ramped up even further as the Brexit trade negotiations begin in earnest during the 11-month transition period which will begin after the UK formally leaves the EU on 31 January 2020 with a withdrawal deal.

What could Brexit look like after the transition? There are three possible Brexit outcomes:

1. A UK-EU trade deal comes into force.

2. The UK exits transition with no EU trade deal.

3. The transition period is extended while negotiations continue.

At the time of writing, it looks like option 3 will be unlikely as MPs backed Prime Minister Boris Johnston’s bill in December to leave the UK on 31 January 2020, which also included a clause banning an extension to the transition period beyond December 2020.

So, will it be option 1 or option 2? A lot will depend on the willingness and goodwill on both sides to reach an outcome that will be suitable for all of the parties involved. Given what we have witnessed over the past three years your guess will be as good as mine as to how this will play out.

Irrespective of the outcome of the Brexit negotiations, our advice will remain consistent. Don’t try and second-guess the markets and don’t let short term market volatility distract you from an asset allocated, diversified investment strategy.

As we have never been through this type of event before in the UK, nobody knows exactly how it will unfold and what the impacts will be for equities, inflation, interest rates, trade relations etc. despite what some are confidently stating in the media. There is no past performance, there are no precedents and the future is impossible to predict.

The political turmoil, noise and confusion surrounding Brexit may well be putting you off making decisions, or wondering whether there is something you can do now to weather a potential storm, or a potential slump in the markets.

But before you go too far down this path, there are some key things to remember. Keep in mind the long term time frame. We don’t doubt the resilience of UK companies and predict that they will navigate Brexit successfully and will continue to look for ways to make money.EU UK Jun 16

Over the long term the stock market has grown even with short-term setbacks – though there are never any guarantees and past performance is not a guide to the future.

It is nigh on impossible to second-guess when is the best time to enter or exit the market, as the speed at which markets react to news, good and bad, means that stock prices have already absorbed the information.

With any long-term investment strategy, having a mix of investments is key. At any point, there’ll be certain sectors or regions that are doing better than others. A portfolio moving in different directions is actually a good thing. It shows that you aren’t exposed to all the same risks.

Investors with diversified portfolios, who stay in the market, have historically and consistently experienced steady gains over time. Perhaps the most important lesson from the past 30 years of stock market volatility is that heavy falls in markets end up being little more than a stumble in the market’s long term rise. Although this cannot always guaranteed.

So, ignore the noise and daily market speculation and movements, and focus on the long term. It’s also important to remember that volatility also presents buying opportunities. Regular reviews provide the opportunity for ongoing discussion and assessment of appetite for investment risk, investment time horizon and investment goals.

Please do not hesitate to get in touch if there are any matters or concerns that you would like to discuss at this time.

Rest assured, we will be keeping a watching brief and will be issuing further communications on our website and by contacting you directly as and when appropriate. We will, of course, also be in contact with you at your next review date.

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Martin aitken at FGDP (UK) Scotland Study Daymaco dental insights guide 19 20

The Martin Aitken & Co Dental accounting, tax and finance team hosted an interactive session with the BDS5’s on Life as an associate, preparing for self-employment, practice ownership and how to get the most out of your accountant, tax and financial adviser.

If you were unable to attend the Study Day and would like to find out more information on topics covered please download our ‘Financial health checks for dentists’ flyer or our ‘Finance, tax and business insights’ guide. 

Both include top tips on:

  • Preparing for life as an associate
  • Managing the practice finances
  • How well is your practice performing?
  • Save tax with capital allowances
  • Selling the practice for nearing retirement?

 

Accounting, tax and virtual finance director services for DentistsMaco service flyer dental health checks 19 20

We'll take care of the compliance an we'll advise you on the best ways to run and manage the practice finances, generate the return and profits your efforts deserve and the best ways to invest your hard earned wealth, whilst minimising your tax liabilities. 

We also advise new and exisiting self-employed Associates and Hygienists on managing and organising their finances, taxes and protection policies, as well as helping them to set up their savings and investment plan.  

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Scottish Dental Show 2020

Martin Aitken is delighted to support the Scottish Dental Show conference and exhibition; we will be exhibiting over both days: 24th and 25th April 2020 at Braehead Arena.

We will be in the same location as previous years where Jayne Clifford, Director, Martin Aitken & Co Ltd and Scott Lawson, IFA, Martin Aitken Financial Services Limited will be on hand to discuss everything from Financial and Pension Planning, as well as any personal and business tax queries you may have.

If you are going along to the Scottish Dental Show on either day, do stop by our stand to say hello. Jayne, Scott and the accounting, tax and financial services team will be delighted to see you for a catch up over a coffee and some homemade tablet and macaroon.

To register your place at the Scottish Dental Show conference and exhibition please click here.

If you would like to discuss any of the issues raised in this edition of Dental Acuity, please get in touch with Jayne Clifford, Director, Martin Aitken & Co.

 

 

Seminar: Principals Question Time 2020
Obituary: Adrienne Airlie CA