BT 2011 Annual Report Download - page 139

136
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Deferred taxation
Retirement
Excess capital benefit Share-based
allowances obligationsapayments Other Total
£m £m £m £m £m
At 1 April 2009 1,811 (1,103) (7) (76) 625
(Credit) expense recognised in the income statement (115) 118 (15) 2 (10)
(Credit) recognised in other comprehensive income – (1,211) – (143) (1,354)
(Credit) expense recognised in equity – – (19) – (19)
Transfer from current tax – – – 18 18
At 31 March 2010 1,696 (2,196) (41) (199) (740)
Deferred tax asset – (2,196) – – (2,196)
Deferred tax liability 1,696 – (41) (199) 1,456
At 1 April 2010 1,696 (2,196) (41) (199) (740)
(Credit) expense recognised in the income statement (315) 201 (17) 111 (20)
Expense recognised in other comprehensive income – 1,534 – 12 1,546
(Credit) recognised in equity – – (91) – (91)
Transfer from current tax 56–––56
At 31 March 2011 1,437 (461) (149) (76) 751
Deferred tax asset – (461) – – (461)
Deferred tax liability 1,437 – (149) (76) 1,212
At 31 March 2011 1,437 (461) (149) (76) 751
aIncludes a deferred tax asset of £1m (2010: £3m) arising on contributions payable to defined contribution schemes.
At 31 March 2011, all of the deferred tax asset of £461m (2010: £2,196m) is expected to be recovered after more than one year. At
31 March 2011, all of the deferred tax liability of £1,212m (2010: £1,456m) is expected to be settled after more than one year.
The rate of UK corporation tax changed from 28% to 26% on 1 April 2011. As deferred tax assets and liabilities are measured at the rates
that are expected to apply in the periods of the reversal, deferred tax balances at 31 March 2011 have been calculated using a rate of 26%.
The impact of the change of rate decreased deferred tax assets by £35m and deferred tax liabilities by £91m totalling a reduction in net
liabilities of £56m. This reduction has been recognised as a deferred tax credit of £172m in the income statement (note 10) and a deferred
tax expense of £116m in other comprehensive income.
The UK Government has also indicated that it intends to enact future reductions in the main rate of UK corporation tax to 23% by 1 April
2014. The future annual corporation tax reductions of 1% are expected to affect the group’s financial statements. The actual impact will
depend on the group’s deferred tax position at that time.
At 31 March 2011 the group had operating losses, capital losses and other temporary differences carried forward in respect of which
no deferred tax assets were recognised amounting to £23.5bn (2010: £29.5bn). The group’s capital losses and other temporary differences
have no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories
in which the losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
2011 Expiry of
At 31 March £m losses
Restricted losses:
Americas 254 2012-31
Europe 1,492 2012-26
Asia 14 2012-16
Total restricted losses 1,760
Unrestricted losses:
Operating losses 3,440 No expiry
Capital losses 17,771 No expiry
Total unrestricted losses 21,211
Other temporary differences 536
Total 23,507
At 31 March 2011, the undistributed earnings of overseas subsidiaries was £5.3bn (2010: £5.5bn). No deferred tax liabilities have been
recognised in respect of these unremitted earnings because the group is in a position to control the timing of the reversal of the temporary
differences and it is probable that such differences will not reverse in the foreseeable future. Temporary differences arising in connection
with interests in associates and joint ventures for which deferred tax liabilities have not been recognised are insignificant.
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