RBS 2008 Annual Report Download - page 50

49RBS Group Annual Report and Accounts 2008
Taxation
Pro forma (1) Statutory
2008 2007 2008 2007
£m £m £m £m
Tax (1,280) 1,709 (2,323) 2,044
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UK corporation tax rate 28.5 30.0 28.5 30.0
Effective tax rate 15.7 19.1 5.7 20.8
Note:
(1) Pro forma excludes the tax effect on the write-down of goodwill and other intangible assets of £715 million.
The actual tax charge differs from the expected tax charge computed by applying the standard rate of UK corporation tax as follows:
Pro forma Statutory
2008 2007 2008 2007
£m £m £m £m
Expected tax (credit)/charge (2,316) 2,689 (11,590) 2,950
Non-deductible goodwill impairment — 12 8,292 12
Unrecognised timing differences 274 29 274 29
Other non-deductible items 323 222 330 222
Non-taxable items (491) (595) (491) (595)
Taxable foreign exchange movements 80 16 80 16
Reduction in deferred tax liability following change in the rate of UK corporation tax — (99) —(189)
Foreign profits taxed at other rates 271 (189) 203 (25)
Losses in year not recognised 942 2942 2
Losses brought forward and utilised (11) (11) (11) (11)
Adjustments in respect of prior periods (352) (367) (352) (367)
Actual tax (credit)/charge (1,280) 1,709 (2,323) 2,044
On a statutory basis, the effective tax rate for the year was 5.7% (2007 – 20.8%). The tax credit is lower than that arising from applying the standard
rate of UK corporation tax of 28.5% to the loss for the period, principally due to non-deductible goodwill impairment and certain carried forward
losses on which no tax relief has been recognised. The effective tax rate on a pro forma basis was 15.7% (2007 – 19.1%).