Barclays 2015 Annual Report Download - page 270

268 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Notes to the financial statements
Performance/return
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.
2015
£m
2014
£m
2013
£m
Current tax charge
Current year 1,901 1,421 1,997
Adjustment for prior years (183) (19) 156
1,718 1,402 2,153
Deferred tax charge/(credit)
Current year (346) 75 (68)
Adjustment for prior years 78 (66) (514)
(268) 9 (582)
Tax charge 1,450 1,411 1,571
Tax relating to each component of other comprehensive income can be found in the consolidated statement of comprehensive income which
additionally includes within Other a tax credit of £21m (2014: £42m charge) principally relating to share based payments.
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.
2015
£m
2015
%
2014
£m
2014
%
2013
£m
2013
%
Profit before tax from continuing operations 2,073 2,256 2,868
Tax charge based on the standard UK corporation tax rate of 20.25%
(2014: 21.50%, 2013: 23.25%) 420 20.25 485 21.50 667 23.25
Non-creditable taxes including withholding taxes 309 14.9 329 14.6 559 19.5
Non-deductible provisions for UK customer redress 283 13.6 – – – –
Non-UK profits at statutory tax rates different from the UK statutory
tax rate 274 13.2 253 11.2 328 11.4
Non-deductible provisions for ongoing investigations and litigation
including Foreign Exchange 261 12.6 387 17.2 – –
Non-deductible expenses including UK bank levy 207 10.0 285 12.6 296 10.3
Impact of change in tax rates 158 7.6 9 0.4 (159) (5.5)
Tax adjustments in respect of share based payments 30 1.4 21 0.9 (13) (0.5)
Non-deductible impairments and losses on disposal 26 1.3 234 10.4 – –
Non-taxable gains and income (241) (11.6) (282) (12.5) (234) (8.2)
Adjustments in respect of prior years (105) (5.1) (85) (3.8) (358) (12.5)
Changes in recognition and measurement of deferred tax assets (77) (3.7) (183) (8.1) 409 14.3
Other items (52) (2.5) 40 1.8 137 4.8
Non-UK losses at statutory tax rates different from the UK statutory
tax rate (43) (2.1) (82) (3.6) (61) (2.1)
Tax charge 1,450 69.9 1,411 62.5 1,571 54.8
The effective tax rate of 69.9% (2014: 62.5%) increased from the previous year. This is mainly due to provisions for UK customer redress, that were
non-deductible in 2015 as a result of changes introduced by the UK summer Budget, and the impact of changes to tax rates. The changes to tax
rates in the period that had an adverse impact on the 2015 tax charge were the reduction of the local New York tax rate and the increase of the UK
tax rate, specifically through the introduction of the new corporation tax surcharge that applies to banks. These tax rate changes resulted in the
carrying value of US deferred tax assets being reduced and are further explained later in Note 10.
The effective tax rate of 69.9% on statutory profit before tax is significantly higher than the effective tax rate on adjusted profit before tax. For further
details on the adjusted effective tax rate, please refer to page 221 of the financial review.