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Notes to the Consolidated Financial Statements

7. Income tax

All figures in millions Notes 2007 2006
Current tax
Charge in respect of current year (71) (81)
Recognition of previously unrecognised trading losses 23
Other adjustments in respect of prior years 27 35
Total current tax charge (44) (23)
Deferred tax
In respect of timing differences (96) (73)
Recognition of previously unrecognised capital losses 76
Recognition of previously unrecognised trading losses 37
Other adjustments in respect of prior years 9 (21)
Total deferred tax (charge)/benefit 13 (87) 19
Total tax charge (131) (4)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the UK tax rate as follows:

All figures in millions 2007 2006
Profit before tax 468 448
Tax calculated at UK rate (141) (135)
Effect of overseas tax rates (25) (17)
Joint venture and associate income reported net of tax 7 7
Income not subject to tax 3 5
Expenses not deductible for tax purposes (12) (18)
Utilisation of previously unrecognised tax losses 3 7
Recognition of previously unrecognised tax losses 136
Unutilised tax losses (2) (3)
Prior year adjustments 36 14
Total tax charge (131) (4)
UK (42) (15)
Overseas (89) 11
Total tax charge (131) (4)
Add back: tax benefit on other net gains and losses (9) (4)
Add back: tax benefit on amortisation of acquired intangibles (19) (10)
Add back: tax (benefit)/charge on other finance income (6) 5
Tax amortisation benefit on goodwill and intangibles 25 25
Recognition of tax losses (127)
Adjusted income tax charge – continuing operations (140) (115)
Adjusted income tax charge – discontinued operations (5) (15)
Total adjusted income tax charge (145) (130)
Tax rate reflected in adjusted earnings 26.4% 25.9%

The tax benefit on items charged to equity is as follows:

All figures in millions 2007 2006
Share-based payments 7 2
Pension contributions and actuarial gains and losses 28 9
Net investment hedges and other foreign exchange gains and losses (6) 1
29 12

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