BT 1999 Annual Report Download - page 71

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NOTES TO THE FINANCIAL STATEMENTS
70
1999 1998 1997
10. Tax on profit on ordinary activities £m £m £m
))))))))))))01111110051111
United Kingdom:
Corporation tax at 31% (1998 – 31%, 1997 – 33%) 1,200 984 1,135
Deferred taxation charge (credit) at 30% (1998 – 30%, 1997 – 33%) 71 17 (100)
Taxation on the group’s share of results of associates 11 –
Deferred taxation provision released due to reduction in corporation tax rate – (25) –
Prior year adjustments –(2) 1
00000000000511!!!01111110051111
Total UK taxation, excluding windfall tax 1,272 975 1,036
Overseas taxation:
Current 14 6 17
Taxation charge on the group’s share of results of joint ventures 31 2
Taxation charge (credit) on the group’s share of results of associates 4(5) 47
00000000000511!!!01111110051111
Total corporation and similar taxes 1,293 977 1,102
Windfall tax –510 –
00000000000511!!!01111110051111
Total tax on profit on ordinary activities 1,293 1,487 1,102
00000000000511!!!01111110051111
The company’s charge to the UK windfall tax, imposed on certain privatised companies in July 1997, was paid in two equal
instalments in December 1997 and 1998. The charge was based on the group’s profit for the financial years ended 31 March 1986
to 31 March 1989.
Total tax on profit on ordinary activities, excluding the windfall tax, varied from the amount computed by applying the corporation
tax rate to profit on ordinary activities before taxation. The differences were attributable to the following factors:
1999 1998 1997
%% %
))))))))))))01111110051111
UK corporation tax rate 31.0 31.0 33.0
Non-deductible depreciation 0.6 0.6 0.8
Non-deductible overseas losses 1.5 1.1 1.0
Unprovided deferred taxes on excess capital allowances (0.7) (0.9) (0.9)
Effect of reduction in UK corporation tax rate on deferred tax provision (0.1) (0.8) –
Lower effective tax on gain in MCI shares (1998 – MCI merger break up fee) (2.4) (0.7) –
Non-deductible premium on bonds repurchased –– 0.4
Other 0.2 0.1 0.1
00000000000511!!!01111110051111
Effective corporation tax rate 30.1 30.4 34.4
00000000000511!!!01111110051111
Deferred taxation of £30m (1998 – £30m, 1997 – £28m) arising on excess capital allowances and £nil (1998 – £nil, 1997 – £19m)
on profits of associates and joint ventures was not provided in the year ended 31 March 1999.
The deferred taxation charge (credit) was mainly the result of the tax effect of timing differences as follows:
1999 1998 1997
£m £m £m
))))))))))))01111110051111
Excess capital allowances 124 62
Pension provisions 81 20 (103)
Other timing differences (11) (27) (59)
00000000000511!!!01111110051111
71 17 (100)
Release due to reduction in corporation tax rate –(25) –
Prior year adjustments (a) 5(14) 21
00000000000511!!!01111110051111
Total deferred taxation charge (credit) 76 (22) (79)
00000000000511!!!01111110051111
(a) Reclassification between deferred and current taxation on the profit on ordinary activities for prior years.