Barclays 2013 Annual Report Download - page 296

Note 10: Tax
Accounting for income taxes
Barclays applies IAS 12 Income Taxes in accounting for taxes on income. Income tax payable on taxable profits (‘Current Tax’) is recognised as
an expense in the period in which the profits arise. Withholding taxes are also treated as income taxes. Income tax recoverable on tax allowable
losses is recognised as a current tax asset only to the extent that it is regarded as recoverable by offset against taxable profits arising in the
current or prior period. Current tax is measured using tax rates and tax laws that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising from the differences between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates and legislation
enacted or substantively enacted by the balance sheet date which are expected to apply when the deferred tax asset is realised or the deferred
tax liability is settled. Deferred tax assets and liabilities are only offset when there is both a legal right to set-off and an intention to settle on a
net basis.
2013
£m
2012
£m
2011
£m
Current tax charge
Current year 1,997 568 2,690
Adjustment for prior years 156 207 (61)
2,153 775 2,629
Deferred tax (credit)
Current year (68) (72) (657)
Adjustment for prior years (514) (87) (70)
(582) (159) (727)
Tax charge 1,571 616 1,902
Tax relating to each component of other comprehensive income can be found in the consolidated statement of comprehensive income, which
includes within Other a tax charge of £37m (2012: £96m credit; 2011: £74m charge), principally relating to the UK tax rate change in 2013 and
share based payments in 2012 and 2011.
The table below shows the reconciliation between the actual tax charge and the tax charge that would result from applying the standard UK
corporation tax rate to the Group’s profit before tax.
2013
£m
2012
£m
2011
£m
Profit before tax from continuing operations 2,868 797 5,770
Tax charge based on the standard UK corporation tax rate of 23.25% (2012: 24.5%, 2011: 26.5%) 667 195 1,529
Effect of non-UK profits/losses at statutory tax rates different from the UK statutory tax rate 267 401 193
Non-creditable taxes 559 563 567
Non-taxable gains and income (234) (642) (494)
Share based payments (13) (63) 147
Deferred tax assets not recognised/(previously not recognised) 409 (135) (816)
Change in tax rates (159) (75) 17
Non-deductible impairment charges, loss on disposals and UK bank levy 118 84 770
Other items including non-deductible expenses 315 168 120
Adjustments in respect of prior years (358) 120 (131)
Tax charge 1,571 616 1,902
Effective tax rate 54.8% 77.3% 33.0%
The tax charge of £1,571m (2012: £616m) represented an effective tax rate of 54.8% (2012: 77.3%) on profit before tax of £2,868m (2012:
£797m). The effective tax rate decreased mainly due to the non-recurrence of the factors that increased the rate in 2012, principally the
combination of significant losses in the UK (with relief at the UK statutory rate of 24.5%) and profits outside the UK taxed at higher rates.
The effective tax rate is higher than the UK statutory tax rate of 23.25% (2012: 24.5%) due to the items represented in the tax rate
reconciliation above.
The tax charge for 2013 included a credit of £358m relating to adjustments in respect of prior years which comprises of £337m relating to the
reassessment of items with uncertain tax treatment resulting from audit settlements with non-UK tax authorities and £21m relating to differences
between the final tax charge in prior period tax returns for entities in the consolidated Group and the estimated tax charge included in the
consolidated financial statements. These adjustments in respect of prior years are not considered to be indicative of future trends.
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294 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued