BT 2008 Annual Report Download - page 108

BT Group plc Annual Report & Form 20-F 107
7. Taxation
Analysis of taxation expense (credit) for the year
2008 2007 2006
£m £m £m
.....................................................................................................................................................................................................................................
United Kingdom
Corporation tax at 30% (2007 and 2006: 30%) 214 256 404
Adjustments in respect of prior periods 18 (1,096) (69)
Non UK taxation
Current 42 25 12
Adjustments in respect of prior periods (88) 38 1
Total current tax expense (credit) 186 (777) 348
Deferred tax
Origination and reversal of temporary differences 78 367 155
Adjustment in respect of prior periods (26) 42 (11)
Total deferred tax expense 52 409 144
Total taxation expense (credit) in the income statement 238 (368) 492
Factors affecting taxation expense (credit)
The taxation expense (credit) on the profit for the year differs from the amount computed by applying the corporation tax rate to
the profit before taxation as a result of the following factors:
2008 2007 2006
£m % £m % £m %
.....................................................................................................................................................................................................................................
Profit before taxation 1,976 2,484 2,040
Notional taxation expense at UK rate of 30% (2007
and 2006: 30%) 592 30.0 745 30.0 612 30.0
Effects of:
Non deductible depreciation and amortisation 23 1.1 4 0.1 8 0.4
Non (taxable) deductible non UK (profits) losses (7) (0.3) 9 0.4 29 1.4
Higher (lower) taxes on non UK profits 7 0.3 11 0.4 (1) –
Lower taxes on gain on disposal of non current
investments and group undertakings ––(2) (0.1) – –
Other deferred tax assets not recognised (13) (0.6) – – (25) (1.2)
Associates and joint ventures (2) (0.1) (5) (0.2) (5) (0.2)
Adjustments in respect of prior periods (56) (2.8) (78) (3.2) (79) (3.9)
Tax credit in respect of settlement of open tax years (40) (2.0) (938) (37.8) – –
Re-measurement of deferred tax balances at 28% (154) (7.8) ––––
Other (112) (5.8) (114) (4.5) (47) (2.4)
Total taxation expense (credit) and effective tax rate 238 12.0 (368) (14.9) 492 24.1
Specific items 343 979 41
Total taxation expense before specific items and
effective tax rate on profit before specific items 581 23.2 611 24.5 533 24.5
Tax on items taken directly to equity
2008 2007 2006
£m £m £m
.....................................................................................................................................................................................................................................
Current tax credit on exchange differences (1) ––
Deferred tax expense (credit) relating to losses on cash flow hedges 29 62 (45)
Deferred tax expense relating to ineffective hedges ––9
Deferred tax expense on actuarial gain relating to retirement benefit obligations 804 424 629
Total taxation on items taken to statement of recognised income and expense 832 486 593
Current tax credit relating to share based payments (17) (12) –
Deferred tax expense (credit) relating to share based payments 62 (70) (5)
Total taxation on items taken directly to equitya877 404 588
a2008 includes a £50 million expense arising from the re-measurement of deferred tax balances at 28%.
Financial statements