RBS 2003 Annual Report Download - page 152

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5 Tax on profit on ordinary activities
2003 2002 2001
£m £m £m
Current taxation:
UK corporation tax charge for the year at 30% 1,095 909 984
Over provision in respect of prior periods (66) (13) (16)
Relief for overseas taxation (211) (26) (98)
818 870 870
Overseas taxation:
Current year charge 538 370 381
(Over)/under provision in respect of prior periods (11) (2) 31
1,345 1,238 1,282
Share of associated undertakings 2 22
Current tax charge for the year 1,347 1,240 1,284
Deferred taxation:
Origination and reversal of timing differences 598 372 255
Over provision in respect of prior periods (35) (56) (2)
Tax charge for the year 1,910 1,556 1,537
The actual tax charge differs from the expected tax charge computed by applying the standard rate of UK corporation tax
of 30% as follows:
2003 2002 2001
£m £m £m
Expected tax charge 1,848 1,429 1,276
Goodwill amortisation 200 183 169
Contributions to employee share schemes (35) (40) (48)
Non-deductible items 231 179 251
Non-taxable items (207) (163) (92)
Capital allowances in excess of depreciation (626) (340) (280)
Taxable foreign exchange movements 5 416
Foreign profits taxed at other rates 23 3 (13)
Unutilised losses brought forward and carried forward (15) — (10)
Current taxation adjustments relating to prior periods (77) (15) 15
Current tax charge for the year 1,347 1,240 1,284
Deferred taxation:
Origination and reversal of timing differences 598 372 255
Adjustments in respect of prior periods (35) (56) (2)
Actual tax charge 1,910 1,556 1,537
The following factors may affect future tax charges:
(1) No deferred tax is recognised on the unremitted reserves of overseas subsidiary and associated undertakings. A substantial
proportion of such reserves are required to be retained by the overseas undertakings to meet local regulatory requirements.
(2) Deferred tax assets of £127 million (2002 – £107 million) resulting from tax losses carried forward have not been recognised as there
is insufficient evidence that the asset will be recoverable. These assets may be recoverable if the losses can be offset against
suitable future taxable profits arising in the same tax jurisdiction.
(3) The fair values of certain financial assets are disclosed in Note 40. The tax that could be payable if these assets were disposed of
at the values shown is estimated at £561 million (2002 – £965 million). Because of the nature of these financial assets which are held
as part of the banking business, it is not possible to determine the amount that may become payable in the foreseeable future.
(4) Freehold and long leasehold properties are revalued (see Note 20). No provision has been made for deferred tax on gains
recognised on revaluing Group properties except where there is a commitment to sell the asset and any taxable gain will not be
subject to rollover relief. The tax that could be payable if these assets were disposed of at their revalued amount is estimated at
£109 million (2002 – £81 million), including tax on rolled over gains (see note (5) below). No such tax is expected to be payable in
the foreseeable future.
(5) No provision has been made for deferred tax on certain gains realised on disposals of property and other assets as there is an
expectation of rolling over such gains into replacement assets. Expenditure to date on valid replacement assets together with
forecasts of future such expenditure indicate that these gains will be available for rollover relief. The tax that could be payable if the
conditions for rollover relief were not met is estimated at £68 million (2002 – £93 million).
Notes on the accounts continued
Notes on the accounts