BT 2014 Annual Report Download - page 70

67
The Strategic Report
Group performance
Group performance
Taxation
Our eective corporation tax rate was 21.7% compared with 22.5% in
201213. This is slightly lower in both years than the UK corporation tax
rate of 23% (201213 24%).
Total tax contribution
This year we contributed £3.0bn to the UK Exchequer (201213
£2.9bn). This ranked us the ninth highest UK contributor, according
to the Hundred Group Total Tax Contribution Survey for 2013. We also
contributed £0.4bn in our signicant non-UK jurisdictions.
This year we paid UK corporation tax of £299m. Part of this years UK
corporation tax liabilities, as well as those arising in 201213, were
covered by a reallocation of overpayments made in prior years following
the considerable tax deductible pension decit payment made in March
2012 and the use of capital allowances that we had not previously
claimed. We paid non-UK corporate income taxes of £48m (201213
£63m, 201112 £47m).
Our approach to tax
Our goal is to be compliant with all our global tax obligations.
Our tax strategy is set centrally at a group level and agreed by the Board.
Group functions support regional management in complying with local
tax obligations and achieving group strategy.
We seek to take advantage of available tax incentives, reliefs and
exemptions in line with, and in the spirit of, tax legislation.
We are committed to maintaining a transparent and constructive
working relationship with HM Revenue & Customs and with local tax
authorities in the jurisdictions in which we operate. We are committed
tofull disclosure on a real-time basis.
We also describe our approach to taxation in
our Better Future report at www.bt.combetterfuturereport
Tax expense
Our total tax expense before specic items was £613m (201213
£597m, 201112 £576m).
Our eective tax rate on prot before taxation and specic items is
slightly lower than the UK statutory rate. As shown below, this is due
tothe utilisation of non-UK losses, prior year adjustments and other
taxadjustments including legislative driven incentives.
Year ended 31 March 2014 2013a2012a
Before specic items £m £m £m
Adjusted prot before taxation 2,827 2,656 2,391
Tax at UK statutory rate of 23%
(201213 24%, 201112 26%) 650 638 621
Non-UK losses utilised (13) (14) (75)
Prior year adjustments (17) (57) (74)
Non-deductible items 16 30 37
Other tax adjustments (23)  67
Eective tax charge 613 597 576
Eƪective tax rate 21.7% 22.5% 24.1%
a 5estated. See note 1 to the consolidated Ƭnancial statements.
The UK corporation tax rate has been reducing annually since
1 April 2011 and changed from 24% to 23% on 1 April 2013 and
from23% to 21% on 1 April 2014. It will change from 21% to 20%
on1 April 2015.
A reconciliation of reported prot before taxation (which includes
specic items) to total tax expense is shown in note 9 to the consolidated
nancial statements.
Tax losses
We have unrecognised tax losses of £21.3bn (201213 £21.4bn)
ofwhich £17.1bn are capital losses arising in the UK.
The majority of the remaining losses of £4.2bn arose in our non-UK
entities in prior periods. The timeframe in which we can use these
losses to oset against future taxable prots, and our ability to do so,
isdetermined by the location and protability of the subsidiaries in
which the losses arose.
More details are set out in note 9 to the consolidated nancial statements.