Notes to the consolidated financial statements

Analysis of charge for the year

Continuing

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Year to 31 March

2011
£m

2010
£m

Current tax:

 

 

In respect of the current year

 

 

– UK

1

– overseas

3

33

Adjustments in respect of previous years

(10)

(2)

Exceptional tax credit

(15)

 

(7)

17

Deferred tax:

 

 

– deferred tax charge/(credit)

64

(112)

– exceptional tax credit

(8)

Income tax expense/(credit)

49

(95)

The income tax charge relating to continuing operations in the year to 31 March 2011 of £49 million (2010 – credit of £95 million) includes a charge of £10 million in respect of pre-tax exceptional items (2010 – £117 million credit).

Included within current tax is a £10 million credit (2010 – £2 million) principally relating to the settlement of prior year tax obligations in a number of jurisdictions.

The exceptional tax credit of £8 million represents the recognition of a deferred tax asset on unrealised profit in inventory following the restructuring of the Group. £15 million in 2010 represented releases of various tax provisions following settlement of outstanding issues around the Group.

The effective tax rate for the year, calculated on the basis of the total income tax charge relating to continuing operations as a proportion of profit before tax, is 19.7% (2010 – income tax credit on loss before tax of 81.9%). This compares with the standard rate of corporation tax in the UK of 28% (2010 – 28%).

The standard rate of corporation tax in the United Kingdom will reduce from 28% to 26% from 1 April 2011.

Discontinued

The income tax credit in respect of discontinued operations (Note 12) in the year to 31 March 2011 is £16 million (2010 – £11 million expense).

Continuing

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Year to 31 March

2011
£m

2010
£m

Profit/(loss) before tax

245

(116)

Corporation tax charge/(credit) thereon at 28% (2010 – 28%)

69

(32)

Adjusted for the effects of:

 

 

– exceptional tax credit

(8)

(15)

– income not taxable/(expenses) not deductible for tax purposes

7

(2)

– losses not recognised

15

16

– adjustments to tax in respect of previous periods

(10)

– different tax rates applied on overseas earnings

(24)

(62)

Total

49

(95)

The effective tax rate relating to continuing operations on profit before exceptional items, amortisation and exceptional tax items is 18.5% (2010 – 20.8%).

Tax (charge)/credit relating to components of other comprehensive income

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Year to 31 March

 

Notes

2011
£m

2010
£m

Retirement benefit obligations

 

(19)

29

Cash flow hedges

 

(5)

(4)

Tax losses

 

22

Other

 

2

Tax credit relating to components of other comprehensive income

 

25

Current tax

 

Deferred tax

29

25

Tax on items recognised directly in equity

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Year to 31 March

 

2011
£m

2010
£m

Deferred tax credit on share-based payments

(1)

(1)

Total

(1)

(1)