Notes to the accounts
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6 Taxation
| Current £m |
Deferred £m |
REIT entry charge £m |
2007 £m |
2006 £m |
|
|---|---|---|---|---|---|
| Tax on non-exceptional items | 2.7 | (0.5) | – | 2.2 | 12.0 |
| Tax on exceptional items and property disposals | – | – | – | – | 1.8 |
| Other exceptional tax | – | – | 3.9 | 3.9 | 122.1 |
| Valuation items: | |||||
| Investment and development property | – | 8.7 | – | 8.7 | (848.1) |
| Derivative financial instruments | – | 15.6 | – | 15.6 | 51.2 |
| 2.7 | 23.8 | 3.9 | 30.4 | (661.0) | |
| Taxation charge for the financial year | 2007 £m |
2006 £m |
|---|---|---|
| Current UK corporation tax at 30% (2006 – 30%) on profits | 6.0 | 27.6 |
| Prior year items – UK corporation tax | (3.4) | 0.2 |
| 2.6 | 27.8 | |
| Overseas taxation (including £0.7m (2006 – £nil) of prior year items) | 0.1 | 1.8 |
| Current tax on profits excluding exceptional items and property disposals | 2.7 | 29.6 |
| Deferred tax: | ||
| On investment and development property | 8.7 | (848.1) |
| On derivative financial instruments | 15.6 | 51.2 |
| On other temporary differences | (0.5) | (17.6) |
| Deferred tax on profits excluding exceptional items and property disposals | 23.8 | (814.5) |
| Tax charge/(credit) on profits excluding exceptional items and property disposals | 26.5 | (784.9) |
| REIT entry charge | 3.9 | 154.3 |
| Exceptional current tax credit | – | (32.2) |
| Tax on exceptional items and property disposals: | ||
| – current tax | – | 1.8 |
| – deferred tax | – | – |
| Exceptional tax and tax credit on exceptional items and property disposals | – | (30.4) |
| Total tax charge/(credit) | 30.4 | (661.0) |
Factors affecting the tax charge for the year
The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30 per cent). The differences are explained below:
| 2007 £m |
2006 £m |
|
|---|---|---|
| Profit/(Loss) before tax | (124.8) | 903.1 |
| Profit/(Loss) on ordinary activities multiplied by the standard rate in the UK (30%) | (37.4) | 270.9 |
| UK capital allowances not reversing on sale | (8.2) | 0.4 |
| Disposals of properties and investments | 1.0 | (9.5) |
| Tax relief on items only appearing in subsidiary accounts | – | (32.2) |
| Prior year corporation tax items | (2.7) | 0.2 |
| Prior year deferred tax items | 2.5 | 1.1 |
| Expenses disallowed, net of capitalised interest | (3.2) | (4.6) |
| REIT exemption – corporation tax | (31.7) | – |
| REIT exemption – deferred tax | 108.1 | (1,041.9) |
| REIT exemption – entry charge | 3.9 | 154.3 |
| Utilisation of losses brought forward | (1.0) | – |
| Overseas taxation | 0.8 | 0.3 |
| Reduction in deferred tax following cut in corporate tax rate | (1.7) | – |
| Total tax charge/(credit) | 30.4 | (661.0) |
Tax items that are taken directly to equity are shown in the Statements of Recognised Income and Expense.