- Financial Statements
Notes to the Consolidated Financial Statements
for the year to 31 December 2007
30. Share-based payment tax reserve
| £m | |
| Balance at 1 January 2006 | 4.0 |
| Increase for the year | 4.2 |
| Balance at 31 December 2006 | 8.2 |
| Decrease for the year | (2.6) |
| Balance at 31 December 2007 | 5.6 |
As explained in the statement of accounting policies, an expense is recorded in the Group’s income statement over the period from the grant date to the vesting date of share options granted to employees. As there is a temporary difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is calculated by comparing the estimated amount of tax deduction to be obtained in the future (based on the company’s share price at the balance sheet date) with the cumulative amount of the expense recorded in the income statement. If the amount of estimated future tax deduction exceeds the cumulative amount of the remuneration expense at the statutory tax rate, the excess is recorded directly in equity, in this share-based payment tax reserve.
A decrease for the year has been recorded as a result of the revaluation of share schemes at the end of 2007. This has resulted in a smaller amount of tax relief obtained and expected than previously considered. This decreases the amount of the deferred tax asset held in respect of share schemes yet to vest as indicated in note 15.