IFRS condensed financial statements
A5 – Tax
(a) Tax (credited)/charged to the income statement
(i) The total tax credit comprises:
| 6 months 2009 £m |
Restated 6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| Current tax | |||
| For this period | 157 | 285 | 527 |
| Prior year adjustments | (88) | (67) | (284) |
| Total current tax | 69 | 218 | 243 |
| Deferred tax | |||
| Origination and reversal of temporary differences |
(153) | (827) | (1,814) |
| Changes in tax rates or tax laws | 1 | – | (7) |
| Write–down of deferred tax assets | 12 | – | 95 |
| Total deferred tax |
(140) | (827) | (1,726) |
| Total tax credited to income statement | (71) | (609) | (1,483) |
(ii) The group, as a proxy for policyholders in the UK, Ireland, Singapore and Australia, is required to record taxes on investment income
and gains each year. Accordingly, the tax benefit or expense attributable to UK, Irish, Singapore and Australian life insurance
policyholder returns is included in the tax charge. The tax credit attributable to policyholders returns included in the credit above is
£264 million (30 June 2008: £672 million credit; 31 December 2008: £1,068 million credit).
(b) Tax charged/(credited) to equity
(i) The total tax charge/(credit) comprises:
| 6 months 2009 £m |
Restated 6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| Current tax | – | – | (16) |
| Deferred tax | |||
| In respect of pensions and other post–retirement obligations |
(13) | – | (15) |
| In respect of unrealised gains/(losses) on investments | 158 | (101) | (204) |
| 145 | (101) | (219) | |
| Total tax charged/(credited) to equity | 145 | (101) | (235) |
(ii) The tax credit attributable to policyholders’ returns included above is £nil (30 June 2008: £nil; 31 December 2008: £nil).
(c) Tax reconciliation
The tax on the group’s profit before tax differs from the theoretical amount that would arise using the tax rate of the home country of
the Company as follows:
| 6 months 2009 £m |
Restated 6 months 2008 £m |
Full year 2008 £m |
|
|---|---|---|---|
| Profit/(loss) before tax | 676 | (693) | (2,368) |
| Tax calculated at standard UK corporation tax rate of 28.0% (2008: 28.5%) | 189 | (198) | (675) |
| Different basis of tax – policyholders | (214) | (465) | (767) |
| Adjustment to tax charge in respect of prior years | (42) | (55) | (283) |
| Non–assessable income | (30) | (19) | (94) |
| Non–taxable profit on sale of subsidiaries and associates | (6) | (3) | (2) |
| Disallowable expenses | 24 | 26 | 95 |
| Different local basis of tax on overseas profits | 6 | 95 | (61) |
| Impact of increase in statutory local rates | 3 | – | – |
| (Recognition)/non–recognition of deferred tax | 14 | 17 | 292 |
| Other | (15) | (7) | 12 |
| Total tax credited to income statement | (71) | (609) | (1,483) |
