Aviva 2007 Annual Report Download - page 157
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Aviva plc
Annual Report and
Accounts 2007
153
Financial
statements
13 – Tax
This note analyses the tax charge for the year and explains the factors that affect it.
(a) Tax charged to the income statement
(i) The total tax charge comprises:
2007 2006
£m £m
Current tax
For this year 888 1,022
Prior year adjustments (94) (287)
Total current tax 794 735
Deferred tax
Origination and reversal of temporary differences (348) 221
Changes in tax rates or tax laws (88) (7)
Write-down of deferred tax assets (6) (15)
Total deferred tax (442) 199
Total tax charged to income statement (note 13c) 352 934
(ii) The Group, as a proxy for policyholders in the UK, Ireland and Australia, is required to record taxes on investment
income and gains each year. Accordingly, the tax benefit or expense attributable to UK, Irish and Australian life insurance
policyholder returns is included in the tax charge. The tax expense attributable to policyholders’ returns included in the
charge above is £15 million (2006: £346 million).
(iii) The tax charge can be analysed as follows:
2007 2006
£m £m
UK tax 97 479
Overseas tax 255 455
352 934
(iv) Unrecognised tax losses and temporary differences of previous years were used to reduce current tax expense and
deferred tax expense by £51 million and £6 million, respectively (2006: £73 million and £24 million, respectively).
(v) Deferred tax (credited)/charged to the income statement represents movements on the following items:
2007 2006
£m £m
Long-term business technical provisions and other insurance items 315 364
Deferred acquisition costs 34 (47)
Unrealised gains on investments (793) (144)
Pensions and other post-retirement obligations 40 166
Unused losses and tax credits (272) (247)
Subsidiaries, associates and joint ventures (33) 135
Intangibles and additional value of in-force long-term business (75) (73)
Provisions and other temporary differences 342 45
Total deferred tax (credited)/charged to income statement (442) 199
(b) Tax charged to equity
(i) The total tax charge/(credit) comprises:
2007 2006
£m £m
Current tax (19) (9)
Deferred tax
In respect of pensions and other post-retirement obligations 269 (29)
In respect of unrealised (gains)/losses on investments (71) 43
198 14
Total tax charged to equity 179 5
(ii) The tax credit attributable to policyholders’ returns included above is £nil (2006: £nil).