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102
MARKS AND SPENCER GROUP PLC
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
7 INCOME TAX EXPENSE CONTINUED
B. Taxation reconciliation
The e ective tax rate was 19.7% (last year 12.8%) and is reconciled below:
2015
£m
2014
£m
Profi t before tax 600.0 580.4
Notional taxation at the standard UK corporation tax rate of 21% (last year 23%) 126 .0 133.5
Depreciation and other amounts in rel ation to fi xed assets that do not qualify for tax relief 5.3 4.3
Other income and expenses that are not taxable or allowable for tax purposes (9.9) (5.4)
Retranslation of deferred tax balances due to the change in statutory UK tax rates (0.3) (22.5)
Overseas profi ts taxed at rates di erent to those of the UK (7.9) (3.7)
Overseas tax losses where there is no relief anticipated in the foreseeable future 4.8 8.7
Adjustments to current and deferred tax charges in respect of prior periods (6.1) (6.4)
Adjustments to underlying profi t:
– International store review charges where no tax relief is available 7.7 4.9
– property disposal gain covered by other losses arising in the year (1.3) (13.0)
– deferred tax rate change benefi t 0.1 –
– overseas rate di erences (0.1) –
Non-underlying adjustment to current and deferred tax charges in respect of prior periods – (26.0)
Total income tax expense 118 . 3 74.4
After excluding non-underlying items the underlying e ective tax rate was 18.9% (last year 18.8%).
The non-underlying adjustment to the tax charge in respect of prior periods arose from the successful outcome of litigation in relation to
the Group’s claim for UK tax relief of losses of its former European subsidiaries (£18.5m) and release of provisions following settlement of
disputes with the tax authorities (£7.5m).
C. Current tax reconciliation
The current tax reconciliation shows the main adjustments made to the Group’s accounting profi ts in order to arrive at its taxable profi ts.
The reconciling items di er from those in note 7B as the e ects of deferred tax timing di erences are ignored below.
2015
£m
2014
£m
Profi t before taxation 600.0 580.4
Notional taxation at standard UK corporation tax rate of 21% (last year 23%) 126.0 133.5
Disallowable accounting depreciation and other similar items 86.1 85.8
Deductible capital allowances (76.9) (81.2)
Allowable deductions for employee share schemes (10.2) (8.9)
Allowable deductions for employee pension schemes (15.6) (13.9)
Overseas profi ts taxed at rates di erent to those of the UK (5.7) (3.7)
Overseas tax losses where there is no immediate relief 4.8 8.7
Other income and expenses that are not taxable or allowable 1.9 (1.4)
Adjustments to underlying profi t:
– International store review charges where no tax relief is available 7.7 4.9
– property disposal loss relievable in the future/(gain covered by other losses arising in the year) 0.5 (13.0)
– UK property and investment deduction where no tax relief is available 0.6 –
– embedded derivative (0.3) 0.8
– overseas rate di erences (0.1) –
Current year current tax charge 118 . 8 111. 6
Represented by:
UK current year current tax 106.5 97.1
Overseas current year current tax 12. 3 14.5
118 . 8 111. 6
UK adjustments in respect of prior years (7.5) (55.8)
Overseas adjustments in respect of prior years (3.0) (2.7)
Total current taxation (note 7A) 108.3 53.1