Financial statements
Notes to the financial statements
13 Income taxes
| 2007 £m |
2006 £m |
|
|---|---|---|
| Current tax | ||
| Current year | (3) | (3) |
| (3) | (3) | |
| Deferred tax | ||
| Deferred income tax | – | – |
| Total income taxes in the income statement | (3) | (3) |
|
Reconciliation of income taxes in the income statement |
||
| 2007 £m |
2006 £m |
|
| Profit before tax | 1,059 | 855 |
| Profit before tax multiplied by rate of corporation tax in the UK of 30% (2006: 30%) | (318) | (256) |
| Effects of: | ||
| Permanent differences | 5 | 6 |
| Short-term timing differences | 3 | 1 |
| Current period unutilised tax losses | (7) | (7) |
| Prior period utilised tax losses | 8 | – |
| Non-taxable UK dividend income | 15 | 20 |
| Repatriated profits of overseas subsidiaries | (4) | (1) |
| Foreign tax | (3) | (3) |
| Foreign tax credits available for double tax relief | 4 | 1 |
| Realised profits, changes in fair value and impairment losses not taxable | 294 | 236 |
| Total income taxes in the income statement | (3) | (3) |
|
The Group's realised profits, fair value adjustments and impairment losses are primarily included in the Company, the affairs of which are directed so as to allow it to be approved as an investment trust. An investment trust is exempt from tax on capital gains, therefore the Group's capital return will be largely non-taxable. Deferred income tax |
||
| 2007 Group balance sheet £m |
2006 Group balance sheet £m |
|
| Opening deferred income tax liability | ||
| Tax losses | 2 | 2 |
| Unrealised valuation surpluses on investments | – | (1) |
| Income in accounts taxable in the future | (3) | (2) |
| (1) | (1) | |
| Recognised through income statement | ||
| Tax losses utilised | 10 | – |
| Valuation surplus now realised | – | 1 |
| Income in accounts taxable in the future | (10) | (1) |
| – | – | |
| Closing deferred income tax liability | ||
| Tax losses | 12 | 2 |
| Unrealised valuation surpluses on investments | – | – |
| Income in accounts taxable in the future | (13) | (3) |
| (1) | (1) | |
At 31 March 2007 the Group had tax losses carried forward of £588 million (2006: £560 million). It is unlikely that the Group will generate sufficient taxable profits in the future to utilise these amounts and therefore no deferred tax asset has been recognised. These tax losses are available to carry forward indefinitely.