What’s the difference between an accountant and a chartered accountant?

Updated 03 December 2020

4min read

Nick Green

Financial Journalist

Updated 03 December 2020

4min read

A chartered accountant can offer specialist accountancy services and business advice in a range of important areas. The key difference between an accountant and a chartered accountant is that the latter is typically more highly qualified and experienced, and will be a member of a professional body. If you’re seeking straightforward accounting services, you may not need to pay the extra cost of hiring a chartered accountant – but if your needs are more complex or specialised, they may be well worth the higher fee.

What is a chartered accountant?

A chartered accountant is an accountant with the specific professionally accreditation of ‘chartered status’. They have studied accounting to a high level and have gained professional experience in the industry. In addition, chartered accountants are members of a respected professional body, such as CIMA (Chartered Institute of Management Accountants) and are required to stick to a strict ethical and professional code of conduct.

With regard to the ICAEW (Institute of Chartered Accountants in England and Wales), 30% of its chartered accountants work within an accountancy firm. The rest either operate as a sole trader, within a multinational accountancy firm or oversee the finances in another businesses. You’ll often find them in a position like CFO (Chief Financial Officer), where they are responsible for making the most important financial decisions.

What does a chartered accountant do?

In addition to regular accounting services, chartered accountants can provide advice on specific business and financial matters. These include:

• Corporate finance e.g. securing finance for mergers, acquisitions and capital restructuring
• Financial management within a business, such as in-depth cash flow forecasting or managing funds
• Personal financial advice (for both individuals and companies)
• Forensic accounting to support litigation into commercial fraud

Due to their in-depth expertise, many chartered accountants can advise on things that regular accountants can’t. They often have specialised experience in a certain field, such as working with High Net Worth Individuals with more complicated personal finances or estates or testifying as accountancy experts in criminal cases.

What is the difference between an accountant and a chartered accountant?

The title of accountant isn’t a protected term, meaning you don’t have to obtain specific qualifications in order to use it. An accountant may have studied accountancy at foundation level through AAT (Association of Accounting Technicians) or have gained their knowledge through years of professional experience. They will also still need to adhere to the Financial Reporting Council’s (FRC) Corporate Governance and Stewardship Codes. Here you can find out more about what an accountant does.

However, to use the title chartered accountant, an accountant must pass a series of exams and complete three to five years of work experience to gain professional accreditation. Once qualified, a chartered accountant can become a member of either the ICAEW or ACCA (Association of Chartered Certified Accountants).

A chartered accountant who is part of a reputable professional body like ICAEW will also be required to hold professional indemnity insurance. This protects both you and the chartered accountant if unintentional errors occur. Chartered accountants are also be bound by their chosen professional body’s own ethical codes and can have their membership terminated if they do not stick to the guidelines.

When do I need a chartered accountant?

General accountants can offer sound advice on everyday matters such as annual tax returns and invoicing. Enlisting the pricier services of a chartered accountant isn’t necessary if you’ve got a question about VAT, for example. However, it’s best to speak to a chartered accountant if you’re in a more complex financial situation and need specialist advice.

For example, if you run a business and you’re looking to acquire a smaller company, a chartered accountant will help you make a detailed financial plan ahead of the acquisition. They will guide you through the whole process, including how to secure any necessary funding and offer advice on proceeding in a tax efficient way.

Depending on their previous experience, chartered accountants can have in-depth knowledge of a wide range of financial matters, from tax planning to cash flow forecasting. Though all are trained to a high standard, finding a chartered accountant that specialises in a particular field will help you get the best result.

How much does a chartered accountant cost?

The fee charged by a chartered accountant will be determined by a number of factors, including:

• Your annual turnover
• How many employees you have
• How regularly you need to use their services
• How complex the matter is

Regardless of your requirements, chartered accountants are more expensive than accountants. While an accountant will usually charge between £25 to £35 per hour for basic accounting services, specialist tax planning or business planning advice from a chartered accountant could cost up to £150 per hour. You can find a more detailed breakdown of how much accountants generally charge in our previous article.

Where can I find a good accountant?

It can be tricky to find an experienced, knowledgeable accountant or chartered accountant without a personal recommendation. Unbiased’s matching tool can help you find the right professional for you, whether you’re looking for personal advice or help managing your business’ affairs. You can find a local accountant to consult for some one-off advice or enlist help on a more regular basis.

What questions should I ask my chartered accountant during a consultation?

There are a number of questions you need to ask any chartered accountant during your first meeting. Here are some suggestions to get you started:

• What is your fee structure? It’s important to establish upfront how much your chosen chartered accountant charges before going ahead with any further discussions, otherwise you’re wasting both parties’ time if they’re out of your budget.
   
• What are your professional qualifications? All chartered accountant should hold a practising certificate from a respected body, such as ICAEW or ACCA. If they’re not able to show you proof of this, they may not be a legitimate chartered accountant.
   
• Do you have experience in my sector? Finding out if they have worked in your sector, or carried out related work in a similar area, can tell you if a chartered solicitor has the knowledge to help you.
   
• Can I see examples of your previous work? This is a particularly important question if you have a niche issue you need help with. Understanding more about how your chartered accountant has helped other clients with financial restructuring, for example, will help you decide if the relationship is right.
   
• Do you like to take a proactive role? You may be searching for someone who can actively suggest ways to handle your finances, or you might prefer a chartered accountant who sits back until you call on them. Getting a better sense of their attitude to client relationships is a good idea.