Notes to the Consolidated Financial Statements

Page turn

for the year to 31 December 2007

8. Tax

2007 2006
£m £m
Current tax:
UK corporation tax: Current year 88.9 58.8
Prior years (9.8) (9.9)
Relief for foreign tax (5.0) (8.3)
Foreign tax: Current year 18.0 80.4
Prior years 16.9 (8.3)
109.0 112.7
Deferred tax:
UK: Current year (9.1) (3.0)
Prior years 6.3 (0.2)
Foreign: Current year 80.9 (4.8)
Prior years (9.9) 10.3
68.2 2.3
177.2 115.0

Corporation tax is calculated at 30 per cent (2006: 30 per cent) of the estimated assessable profit for the year in the UK.
Taxation outside the UK is calculated at the rates prevailing in the respective jurisdictions.
Deferred tax recognised in the Group statement of recognised income and expense is due to actuarial gains on post-retirement liabilities at the prevailing rate in the relevant jurisdiction. This includes the effect of the change in the UK rate of corporation tax from 30 per cent to 28 per cent from 1 April 2008.

The charge for the year can be reconciled to the profit per the income statement as follows: 2007
£m
2006
£m
(Loss)/profit before tax (19.5) 405.6
Tax at the UK corporation tax rate of 30% (2006: 30%) (5.9) 121.7
Under/(over) provision in respect of prior years 3.5 (8.1)
Tax effect of share of results of joint ventures (2.6) (4.8)
Tax effect of expenses that are not deductible in determining taxable profit 14.0 4.8
Non taxable income (18.9) (22.5)
Effect of higher rates of tax of subsidiaries operating in other jurisdictions (14.5) 19.8
Losses not recognised 12.1
Net reduction in US tax assets recognised 189.4
Other 0.1 4.1
Tax charge for the year 177.2 115.0

The tax charge for the year includes an amount in respect of exceptional items of 70.2m. This is made up of a credit of 14.9m in respect of UK tax and a net charge of 85.1m in respect of US tax.
The charge in the US reflects a write-off of US deferred tax assets held by the Group which are not seen as capable of usage in the forseeable future primarily due to the significant weakening of the US market in the second half of 2007.