ANNUAL REPORT 2011 AVESCO GROUP PLC
www.avesco.com
47
12. Income tax expense/(credit) Analysis of taxation expense/(credit) for the year
2011 £000s
Current tax Current tax on profits for the year Adjustments in respect of prior years
Total current tax
Deferred tax (note 25) Origination and reversal of temporary differences Impact of change in the UK tax rate
Total deferred tax Income tax charge/(credit)
272 (25)
247
(254) 243
(11) 236 2010 £000s
219 (10)
209
(1,362) 82
(1,280) (1,071)
Factors affecting the taxation charge The taxation charge/(credit) for the year is higher (2010: higher) than the standard rate of corporation tax in the UK (27%). The differences are explained below: 2011
£000s Profit/(loss) on continuing operations before tax
Tax calculated at standard rate of UK corporation tax of 27% (2010: 28%) Expenses not deductable for tax purposes
Unrecognised differences between capital allowances and depreciation Tax losses for which no deferred income tax asset has been recognised Other unrecognised temporary differences Other permanent differences
Utilisation of previously unrecognised tax losses Differences in tax rates
Re-measurement of deferred tax - change in tax rates Prior period adjustments
Tax deduction in respect of exercised share options Income tax charge/(credit)
Prior period adjustments relate to various small items across the Group.
Budget 2011 introduced a reduction in the rate of corporation tax from 28% to 26% from 1 April 2011. The rate had previously been reduced from 28% to 27% by Finance (No. 2) Act 2010. This reduction was substantively enacted on 29 March 2011 and fully enacted on 19 July 2011 and the rate at which current tax has been measured is therefore a blended rate based on the reduction from 28% to 26% on 1 April 2011.
A further reduction in the UK corporation tax rate to 25% will be effective from 1 April 2012. This reduction was substantively enacted on 5 July 2011 and fully enacted on 19 July 2011. At the relevant balance sheet date (ie 30 September 2011), the 25% tax rate was substantively enacted and this is the correct rate to apply for deferred tax quantification purposes.
Further rate reductions are also planned for future Finance Acts. These will be enacted in the relevant Finance Acts and the effect of these will be reflected in Company’s financial statements as they become substantively enacted.
102 27
125 489 158 12 -
(518) 458
(353) (25)
(137) 236
2010 £000s
(2,118) (593) (425) -
195 231 160
(720) 9
82
(10) -
(1,071)
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