Preliminary results - 12 months ended 31 December 2005
13. Tax
(a) Tax charged to the income statement
| 2005 £m |
2004 £m |
||
|---|---|---|---|
| Current tax: | |||
| For the year | 799 | 475 | |
| Prior year adjustments | (212) | (92) | |
| Total current tax | 587 | 383 | |
| Deferred tax: | |||
| Origination and reversal of timing differences | 881 | 272 | |
| Changes in tax rates or tax laws | (5) | (1) | |
| Write down of deferred tax assets | 89 | - | |
| Total deferred tax | 965 | 271 | |
| Total tax charged to income statement | 1,552 | 654 | |
The tax expense attributable to policyholders' returns in the UK, Ireland and Australia included in the above charge is £922 million (2004: £383 million).
| Tax charge analysed between | ||
|---|---|---|
| 2005 £m |
2004 £m |
|
| Tax charge attributable to policyholders’ returns | 922 | 383 |
| Tax charge on IFRS operating profit before tax attributable to shareholders’ profits from continuing operations | ||
| 536 | 319 | |
| Tax charge/(credit) on profit on other activities | 94 | (48) |
| Total tax charged to income statement | 1,552 | 654 |
(b) Tax charged to equity
(i) The total tax charge comprises:
| 2005 £m |
2004 £m |
|
|---|---|---|
| Current tax credit | (13) | - |
| Deferred tax (credit ) / charge | (262) | 15 |
| Total tax (credited) / charged to equity | (275) | 15 |
(ii) The tax expense attributable to policyholders’ returns included in the charge above is £3 million (2004: nil).
(c) Tax reconciliation
The tax on the Group's net profit before tax differs from the theoretical amount that would arise using the tax rate of the home country of the Company as follows:
| 2005 £m |
2004 £m |
|
|---|---|---|
| Net profit before tax | 3,450 | 2,025 |
| Tax calculated at standard UK corporation tax rate of 30% (2004: 30%) | 1,035 | 608 |
| Different basis of tax for UK life insurance | 616 | 217 |
| Adjustment to tax charge in respect of prior years | (253) | (88) |
| Non-assessable dividends | (26) | (30) |
| Non-taxable (profit)/loss on sale of subsidiaries and associates | (4) | 12 |
| Disallowable expenses | 55 | 65 |
| Different local basis of tax on overseas profits/(losses) | 168 | (13) |
| Deferred tax assets not recognised | (25) | (120) |
| Other | (14) | 3 |
| Tax charge for the year | 1,552 | 654 |
