(Download XLS:)  |
|
|
2008 |
2007 |
|---|---|---|
|
Current tax |
|
|
|
– Current tax for the year |
103 |
261 |
|
– Adjustments in respect of prior years |
1 |
2 |
|
Total current tax |
104 |
263 |
|
Deferred tax |
|
|
|
– Origination and reversal of temporary differences |
(1,127) |
(186) |
|
Total income tax (credit)/expense |
(1,023) |
77 |
|
|
|
|
|
Represented by: |
|
|
|
Income tax credit attributable to policyholder returns |
(662) |
(88) |
|
Income tax (credit)/expense attributable to equity holders |
(361) |
165 |
|
Total income tax (credit)/expense |
(1,023) |
77 |
The [Group] uses estimates to apportion the income tax expense of [Society] between the elements attributable to policyholder returns and equity holders’ profits. The net equity holders’ profit from UK long term business has borne tax at the effective equity holder tax rate. For participating business and certain non profit business this is sufficiently close to the standard rate of UK corporation tax for that rate to be used in the financial statements. For the remaining non profit business, the effective equity holder tax rate is used. For equity holders’ funds within Society’s [LTF], the equity holder income tax is the income tax attributed to the return on those funds. The balance of income taxes associated with UK long term business profits is then classified as income tax attributable to policyholders’ returns.
There is no definitive method of calculating the effective equity holder tax rate. A number of alternative methods are consistently used, in order to assess the validity of using the standard rate of UK corporation tax.
For international long term business the equity holder income tax is the total income tax in respect of profits earned from that business.
The tax assessed for the year is lower (2007: lower) than the standard corporation tax rate applicable to companies operating in the UK of 28.5% (2007: 30%). The differences are explained below:
| (Download XLS:) |
|
|
2008 |
2007 |
|---|---|---|
|
Income tax (credit)/expense calculated at standard UK corporation tax rate |
(614) |
239 |
|
Effects of: |
|
|
|
Income tax credit relating to policyholder returns |
(474) |
(62) |
|
Disallowable expenditure |
5 |
5 |
|
Non taxable income including UK dividends |
(15) |
(12) |
|
Adjustments in respect of prior years |
1 |
1 |
|
Differences between taxable and accounting investment gains/losses |
7 |
(15) |
|
Difference between taxable and accounting acquisition costs |
(6) |
– |
|
Unrelieved tax losses |
47 |
– |
|
Overseas tax |
6 |
(1) |
|
No tax in respect of property losses attributable to minority interests |
18 |
2 |
|
Higher tax on [SRC] investment return |
2 |
22 |
|
Difference between tax relief and accounting expense for share releases and option exercises |
(1) |
3 |
|
No tax in respect of merger of 1996 Sub-fund with SRC |
– |
(96) |
|
Reduction in UK corporate tax rate |
3 |
(9) |
|
Other |
(2) |
– |
|
Total income tax (credit)/expense |
(1,023) |
77 |
| (Download XLS:) |
|
|
2008 |
2007 |
|---|---|---|
|
Deferred tax recognised directly in equity |
|
|
|
Relating to net gains or losses recognised directly in equity |
(19) |
10 |
|
Exchange gains |
77 |
– |
|
Deferred tax recognised directly in equity |
58 |
10 |
No deferred tax is provided at the incremental rate on the undeclared surplus of £527m (2007: £2,047m) in Society’s LTF represented by the Shareholder Retained Capital (SRC), on the grounds that, at the balance sheet date, no obligation to make a declaration of surplus actually exists and there is no expectation that such a declaration will occur. The maximum amount of incremental tax which would crystallise on such a declaration of surplus is estimated to be £nil (2007: £nil).