National Grid 2016 Annual Report Download - page 117

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6. Tax continued
The tax charge for the year after exceptional items and remeasurements is lower (2015: higher; 2014: lower) than the standard rate of corporation
tax in the UK of 20% (2015: 21%; 2014: 23%):
Before
exceptional
items and
remeasurements
2016
£m
After
exceptional
items and
remeasurements
2016
£m
Before
exceptional
items and
remeasurements
2015
£m
After
exceptional
items and
remeasurements
2015
£m
Before
exceptional
items and
remeasurements
2014
£m
After
exceptional
items and
remeasurements
2014
£m
Prot before tax
Before exceptional items and remeasurements 3,142 3,142 2,876 2,876 2,584 2,584
Exceptional items and remeasurements –(110) –(248) –164
Profit before tax 3,142 3,032 2,876 2,628 2,584 2,748
Profit before tax multiplied by UK corporation
taxrateof 20% (2015: 21%; 2014: 23%) 628 606 604 552 594 632
Effect of:
Adjustments in respect of prior years 2 1 (3) (4) (109) (109)
Expenses not deductible for tax purposes 29 118 31 327 32 284
Non-taxable income (26) (113) (20) (320) (24) (268)
Adjustment in respect of foreign tax rates 124 129 91 77 98 138
Impact of share-based payment (1) (1) (1) (1) (3) (3)
Deferred tax impact of change in UK
andUStaxrates –(296) –(6) –(390)
Other (3) (6) (7) (8) (7) –
Total tax charge 753 438 695 617 581 284
% % % % % %
Effective tax rate 24.0 14.4 24.2 23.5 22.5 10.3
Factors that may affect future tax charges
The Finance Act 2015 (No.2) (the Act) was enacted on 18 November 2015. The Act reduced the main rate of UK corporation tax to 19% with
effect from 1 April 2017 and 18% from 1 April 2020 and deferred tax balances have been calculated at 18%.
The Budget in March this year announced a further reduction in the corporate tax rate to 17% from 1 April 2020, from the previously enacted
18%. This has not been substantively enacted at the reporting date. As the change to 17% had not been substantively enacted at the reporting
date its effects are not included in these financial statements. The overall effect of that change, if it had applied to the deferred tax balances at
the reporting date, would be to reduce the deferred tax liability by an additional £139m and reduce the tax expense for the period by £139m.
There continued to be significant international focus on tax reform during 2015/16, including the OECD’s Base Erosion and Profit Shifting
(BEPS) project to address mismatches in international rules and European Commission initiatives. We will continue to monitor developments
and assess the potential impact for National Grid of these and any further initiatives.
Financial Statements
115National Grid Annual Report and Accounts 2015/16 Financial Statements