You need to think about what you want to shoot, how you want to shoot, what gear you are willing to travel with and lug around, whether you want to be able to change lenses for specific photos, whether you see yourself taking tripods, flashes and extra else with you, or you want something that fits in a pocket etc. Are you going to spend time editing the photos when you get home or do you need good out of camera photos? Is your budget rigid or are you able to spend another 300-700 a year on new lenses, filters and accessories?
Camera size is really not important in determining image quality. However, your 500quid will go much further buying a 2nd hand DSLR and lens, but you will want to spend significantly more down the road on new lenses. There is also an important mindset, will you want to go out with 2-3 lenses and swap them over regularly depending on what you are shooting? Do you see yourself carrying a tripod around (if you really care about IQ then a tripod is a necessity for any static scene).
If you just want to take good photos without hassle or extra costs then something like the Panasonic LX7 is excellent.
Thanks for replying!!
Don't really think I'll be carting around a tripod but I'll probably get lenses for which ever camara I pick if that helps.