Yudu - John Lewis Partnership Annual Report and Accounts 2013

John Lewis Partnership plc annual report and accounts 2013

6 Taxation

Analysis of tax charge - 2013 £m - 2012 £m

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Corporation tax – current year 77.7 67.4

Corporation tax – prior years (1.8) (0.8)

Total current tax charge 75.9 66.6

Deferred tax – current year (28.6) (18.0)

Deferred tax – prior years (0.2) 3.8

47.1 52.4

2013 2012

Tax credited to other comprehensive expense £m £m

Movement in current tax on pension schemes (34.6) (6.5)

Movement in deferred tax on pension schemes (28.9) (48.4)

(63.5) (54.9)

The tax charge for the year is lower (2012: higher) than the standard corporation tax rate of 24.33% (2012: 26.33%). The differences are explained below:

2013 £m - 2012 £m

Profit before tax multiplied by standard rate of corporation tax

in the UK of 24.33% (2012: 26.33%) 48.4 49.6

Effects of:

Adjustment to current tax in respect of prior years (1.8) (0.8)

Restatement of deferred tax balances for reduction in the

corporation tax rate to 23% (2012: 25%) (13.6) (14.4)

Depreciation on assets not qualifying for tax relief 13.6 12.8

Difference between accounting and tax base for land and buildings (2.0) (1.9)

Adjustment to deferred tax in respect of prior years (0.2) 3.8

Sundry disallowables 2.7 3.3

Total tax charge 47.1 52.4

The Finance Act 2013 reduced the main rate of corporation tax from 25% to 23% from 1 April 2013. Further reductions to the main rate are proposed in the Finance Bill 2013 to reduce the rate by 2% in 2014 and 1% in 2015 to 20% from 1 April 2015. The 2% reduction to 23% has been substantively enacted at the end of the year, and therefore is reflected in the consolidated financial statements.

The effect of the 2% rate change on the current year (2012: 2% rate change) was to increase the deferred tax liability by £0.5m (2012: £4.0m decrease) with a £14.2m charge (2012: £10.4m charge) being taken directly to reserves and a £13.6m tax credit (2012: £14.4m credit) to the income statement. Adjustments in future years are expected to be higher than the year ended 26 January 2013, assuming reductions proposed are substantively enacted annually and a comparable level of deferred tax.