22 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method.
| Amounts recognised on the balance sheet |
2007
£m |
2006
£m |
| Deferred tax assets |
56 |
114 |
| Deferred tax liabilities |
(75) |
(63) |
|
|
(19) |
51 |
| Movement on deferred tax |
2007
£m |
2006
£m |
| At 1 January |
51 |
112 |
| Subsidiaries acquired and sold |
(8) |
(7) |
| (Charge)/credit for the year: |
|
|
| Income statement |
35 |
13 |
| Equity |
(92) |
(67) |
| Currency variations |
(5) |
— |
| At 31 December |
(19) |
51 |
The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS 12) during the period are shown below:
| Deferred tax assets |
Pensions
£m |
Tax losses
£m |
Other
£m |
Total
£m |
| At 1 January 2007 |
102 |
20 |
28 |
150 |
| Credited to income statement |
3 |
27 |
45 |
75 |
| Charged to equity |
(84) |
— |
— |
(84) |
| Other movements |
— |
— |
(6) |
(6) |
| Currency variations |
— |
— |
2 |
2 |
| At 31 December 2007 |
21 |
47 |
69 |
137 |
Deferred tax liabilities |
Accelerated tax
depreciation
£m |
Other
£m |
Total
£m |
| At 1 January 2007 |
(94) |
(5) |
(99) |
| Charged to income statement |
(31) |
(9) |
(40) |
| Charged to equity |
(6) |
(2) |
(8) |
| Subsidiaries acquired |
(2) |
(6) |
(8) |
| Other movements |
— |
6 |
6 |
| Currency variations |
(7) |
— |
(7) |
| At 31 December 2007 |
(140) |
(16) |
(156) |
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in relation to certain taxable losses and other temporary differences on the basis that their future economic benefit is uncertain. The gross and tax values of these unrecognised assets together with any expiry dates where relevant are shown below. The tax value of the assets has been calculated using tax rates enacted or substantially enacted at the balance sheet date.
|
|
2007 |
2006 |
|
|
Tax value
£m |
Gross
£m |
Expiry period |
Tax value
£m |
Gross
£m |
Expiry period |
| Tax losses - with expiry: national |
186 |
532 |
2019 to 2027 |
160 |
451 |
2019 to 2026 |
| Tax losses - with expiry: local |
40 |
813 |
2008 to 2027 |
48 |
877 |
2007 to 2026 |
| Tax losses - without expiry |
118 |
402 |
|
112 |
355 |
|
| Other temporary differences |
32 |
113 |
|
50 |
163 |
|
| Unrecognised deferred tax assets |
376 |
1,860 |
|
370 |
1,846 |
|
Included above are tax losses of £677 million with a tax value of £109 million (2006 – £732 million with a tax value of £111 million) that are severely restricted for future use and management, based on the Group’s current profile, believes they are unlikely to be utilised in the foreseeable future.
Deferred tax assets totalling £35 million (2006 – £82 million) have been recognised relating to territories where tax losses have been incurred in the year. It is anticipated that future profitability arising from restructuring and other actions will result in their realisation.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries except where the distribution of such profits is planned. If the earnings were remitted in full, tax of £25 million (2006 – £25 million) would be payable.
The UK Government announced the gradual abolition of industrial building allowances in the 2007 Budget. Since this change had not been substantively enacted at the balance sheet date, its effect is not included in the calculation of deferred tax as at 31 December 2007. The impact of this change on the Group’s future tax rate is anticipated to be insignificant.