Notes to the accounts
for the year ended 31 December 2007
7. Tax expense
| (a) Analysis of charge in the year | 2007 £mn |
2006 £mn |
|---|---|---|
| Current tax: | ||
| UK corporation tax on profits of the year | 69.4 | 38.7 |
| Double tax relief | (41.3) | (20.8) |
| 28.1 | 17.9 | |
| Adjustments in respect of prior years | 0.4 | (6.2) |
| 28.5 | 11.7 | |
| Foreign tax - current | 57.1 | 47.1 |
| Foreign tax - adjustments in respect of prior years | 0.4 | (0.8) |
| Total current tax | 86.0 | 58.0 |
| Deferred tax - origination and reversal of temporary differences | 0.5 | 6.5 |
| Adjustments in respect of prior years | (0.5) | 3.6 |
| Effect of changes in corporation tax rates | 2.8 | - |
| Total tax charge for the year | 88.8 | 68.1 |
| (b) Analysis of credit to equity | 2007 £mn |
2006 £mn |
|---|---|---|
| Current income tax on Equity Compensation Plan and share option awards | 3.9 | 6.1 |
| Deferred tax on Equity Compensation Plan and share option awards - current year | 1.5 | 2.5 |
| Deferred tax on Equity Compensation Plan and share option awards - prior year | - | (0.3) |
| Deferred tax on actuarial gains and losses on defined benefit pension schemes | (2.0) | (1.7) |
| Effect of changes in corporation tax rates | (0.8) | - |
| Tax credit reported in equity | 2.6 | 6.6 |
(c) Factors affecting tax charge for the year
The tax charge for the year is lower (2006: lower) than the UK standard rate of corporation tax (30 per cent.). The differences are explained below:
| 2007 £mn |
2006 £mn |
|
|---|---|---|
| Profit before tax | 392.5 | 290.0 |
| Profit before tax multiplied by corporation tax at the UK standard rate of 30% (2006: 30%) | 117.8 | 87.0 |
| Effects of: | ||
| Impact of profits/losses arising in jurisdictions with higher tax rates | 1.4 | 7.0 |
| Impact of profits/losses arising in jurisdictions with lower tax rates | (36.2) | (24.6) |
| Non-taxable income net of disallowable expenses | (1.6) | (4.7) |
| Movement in unrecognised deferred tax - current year | (2.4) | 2.9 |
| UK tax on profits of overseas entities after double tax relief | 6.0 | 4.0 |
| Overseas tax on profits of UK entities after double tax relief | 0.7 | - |
| Deferred tax adjustments in respect of change in corporation tax rates | 2.8 | - |
| Prior year adjustments: | ||
| UK prior year - current | 0.4 | (6.3) |
| Foreign tax prior year - current | 0.4 | (0.8) |
| Deferred tax prior year | (0.5) | 3.6 |
| Total tax charge for the year | 88.8 | 68.1 |