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85
Financial statements
7 Income tax expense
A. Tax charge
2011
£m
2010
£m
Current tax
UK corporation tax on profits of the year
– current year 215.8 170.3
– prior years (8.6) (5.2)
207.2 165.1
Overseas current tax 11.1 6.1
Total current tax 218.3 171.2
Deferred tax
– current year (43.5) 5.4
– prior years 7.2 3.1
Total deferred tax (see note 25) (36.3) 8.5
Total income tax expense 182.0 179.7
B. Tax reconciliation
2011
£m
2010
£m
Profit before tax 780.6 702.7
Tax at the standard UK corporation tax rate of 28% (last year 28%) 218.6 196.8
Depreciation, charges and other amounts on non-qualifying fixed assets 1.9 1.4
Other income and expenses not taxable or deductible (11.2) (13.6)
Deferred tax rate change benefit (12.9) –
Overseas profits taxed at rates different to those of the UK (4.2) (6.3)
Benefit of current year losses not recognised 7.3 3.8
Adjustments to tax charge in respect of prior periods (1.4) (2.1)
Adjustments to underlying profit:
Profit on property disposals (0.8) (0.3)
IAS 19 Ireland one-off pension credit (1.7) –
IAS 36 Impairment of investment propert
y
1.8 –
IAS 39 Fair value movement of financial instrument (15.2) –
Deferred tax rate change benefit (0.2) –
Total income tax expense 182.0 179.7
The effective tax rate was 23.3% (last year 25.6%) and the underlying effective tax rate was 25.1% (last year 25.6%).
On 23 March 2011, the Chancellor of the Exchequer announced a number of changes to the UK corporation tax system, including a
reduction of the main rate of corporation tax from 28% to 26% with effect from 1 April 2011. This change of rate became substantively
Taxes Act 1968. The Group has remeasured its UK deferred tax assets and liabilities at the end of
the reporting period at 26%, which has resulted in recognition of a deferred tax credit of £13.1m in the income statement (reducing the
total effective tax rate by 1.7%), and recognition of a deferred tax credit of £1.3m in other comprehensive income.
The Chancellor also announced his intention to reduce the rate of corporation tax by 1% per year to 23% by 1 April 2014. As these
changes have not been substantively enacted at the date of the statement of financial position, they have not been recognised in
these financial statements. Had these changes been enacted, then the cumulative effects would have been credits to the income
statement of £19.6m (25%), £26.2m (24%), or £32.7m (23%), and credits to other comprehensive income of £1.9m (25%),
£2.5m (24%), or £3.1m (23%).
it under the Provisional Collection of
enacted for the purposes of IAS 12 – ‘Income Taxes’ on 29 March 2011 when the House of Commons passed a resolution in respect