Tesco 2008 Annual Report Download - page 60

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Tesco PLC Annual Report and
Financial Statements 2008
58 www.tesco.com/annualreport08
Notes to the Group financial statements continued
Note 6 Taxation
Recognised in the Group Income Statement
2008 2007
£m £m
Current tax expense
UK corporation tax 853 505
Foreign tax 78 88
Adjustments in respect of prior years (278) (61)
Benefit of tax losses recognised – adjustments in respect of prior years (56) –
597 532
Deferred tax expense
Origination and reversal of temporary differences 54 147
Benefit of tax losses recognised –(2)
Benefit of tax losses recognised – adjustments in respect of prior years 28 –
Adjustments in respect of prior years 63 95
Change in tax rate (69) –
76 240
Total income tax expense 673 772
UK corporation tax is calculated at 30% (2007 – 30%) of the estimated assessable profit for the year. Taxation in other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.
Reconciliation of effective tax charge for continuing operations
2008 2007
£m £m
Profit before tax 2,803 2,653
Effective tax charge at 30% (841) (796)
Effect of:
Non-deductible expenses (180) (22)
Differences in overseas taxation rates 41 48
Adjustments in respect of prior years 215 (34)
Share of results of joint ventures and associates 23 32
Change in tax rate 69 –
Total income tax charge for the year from continuing operations (673) (772)
Effective tax rate 24.0% 29.1%
The 2008 Finance Bill includes a proposal to reduce the UK corporate income tax rate from 30% to 28% with effect from 1 April 2008. The deferred tax
asset and liability as at 23 February 2008 are stated at the reduced rate of 28%. During the year, agreement was reached with Her Majesty’s Revenue and
Customs (HMRC) on substantially all open issues relating to years up to February 2006 including capital allowance claims.
Tax on items charged to equity
2008 2007
£m £m
Current tax credit/(charge) on:
Foreign exchange movements 250 (20)
Share-based payments 519
255 (1)
Deferred tax credit/(charge) on:
Share-based payments (57) 47
Pensions (75) (34)
(132) 13
Total tax on items credited to equity (note 26) 123 12