Financial Statements
10 Taxation
| 2006 £m |
2005 £m |
|
|---|---|---|
| Tax charge | ||
| Current tax | ||
| UK corporation tax (30%) | (3) | (3) |
| Foreign tax | 11 | 2 |
| 8 | (1) | |
| Adjustments in respect of prior years | (1) | (45) |
| Total current tax charge (credit) | 7 | (46) |
| Deferred tax on income and revaluations | 334 | 130 |
| Group total taxation (net) | 341 | 84 |
| Tax reconciliation | ||
| Profit on ordinary activities before taxation | 1,590 | 738 |
| Less: Profit attributable to funds and joint ventures | (311) | (158) |
| Group profit on ordinary activities before taxation | 1,279 | 580 |
| Tax on profit on ordinary activities at UK corporation tax rate of 30% (2005: 30%) | 384 | 174 |
| Effects of: | ||
| Indexation relief on investment properties | (9) | (48) |
| Goodwill impairment | 72 | |
| Capital allowances | (8) | (10) |
| Tax losses and other timing differences | (84) | 11 |
| Expenses not deductible for tax purposes | (13) | 2 |
| Adjustments in respect of prior years | (1) | (45) |
| Group total taxation | 341 | 84 |
Tax attributable to underlying profits for the year ended 31 March 2006 is £43m (2005: £42m).
Corporation tax receivable at 31 March 2006 was £8m (2005: £22m) as shown in note 15. Deferred tax is set out below:
| 2006 £m |
2005 £m |
|
|---|---|---|
| Deferred tax | ||
| Capital allowances | 124 | 123 |
| Other timing differences | (29) | (29) |
| Intangible assets | 20 | |
| Property and investment revaluations | 1,216 | 851 |
| 1,331 | 945 |
Deferred tax is calculated on temporary differences under the liability method using a tax rate of 30% (2005: 30%). The movement on the deferred tax account is as shown below:
| 2006 £m |
2005 £m |
|
|---|---|---|
| At 1 April | 945 | 746 |
| Acquisition | 23 | 75 |
| Profit or loss charge | 334 | 130 |
| Taken to equity | 29 | (6) |
| At 31 March | 1,331 | 945 |
Deferred tax assets have been recognised in respect of tax losses and other timing differences because it is probable that these assets will be recovered.
The movements in deferred tax assets and liabilities are shown below.
| Liability 2005 £m |
Charged (credited) to income 2005 £m |
Charged (credited) to reserves 2005 £m |
|
|---|---|---|---|
| Capital allowances | 123 | 18 | |
| Other timing differences | (29) | (28) | |
| Property and investment revaluations | 851 | 140 | (6) |
| 945 | 130 | (6) |
| Liability 2006 £m |
Charged (credited) to income 2006 £m |
Charged (credited) to reserves 2006 £m |
|
|---|---|---|---|
| Capital allowances | 124 | 1 | |
| Other timing differences | (29) | 5 | |
| Property and investment revaluations | 1,236 | 328 | 29 |
| 1,331 | 334 | 29 |