Financial Statements

Notes to the Group financial statements

for the year ended 31 March 2006

10. Tax expense

(a) Analysis of charge recognised in the Group income statement	2006 £m		2005 £m
Current tax:
UK Corporation tax on income for the year	94		124
Double tax relief	(1)		(1)
Adjustments in respect of prior years	(2)		4
	91		127
Overseas tax:
Overseas tax on income for the year	17		13
Adjustments in respect of prior years	(4)		–
Total current tax charge for the year	104		140
Deferred tax:
Origination and reversal of temporary differences	70		31
Adjustments in respect of prior years	(9)		5
Total deferred tax charge for the year	61		36
Total tax expense in Group income statement	165		176

(b) Tax reconciliation
The effective tax rate for the year of 25.4% (2005: 27.2%), after adjusting for the net income from associates, is lower than the standard rate of corporation tax in the United Kingdom (30%). The differences are explained below:

Profit before tax	649		648
Plus: tax on share of profits of associates and joint ventures	1		1
Adjusted profit before tax	650		649
Adjusted profit before tax multiplied by the standard rate of Corporation tax in the UK of 30% (2005: 30%)	195		195
Effects of:
Adjustments to tax charge in respect of prior periods	(15)		9
Income not taxable	(6)		(6)
Expenses not deductible	39		22
Utilisation of previously unrecognised tax losses	(1)		(1)
Tax on share of profits of associates	(1)		(1)
Differences in tax rates	(28)		(30)
Other adjustments	(20)		(14)
Disposal of businesses – continuing operations	2		2
Total tax expense in Group income statement	165		176

(c) The effective rate of tax on Benchmark PBT
The effective rate of tax based on Benchmark PBT of £829m (2005: £910m) is 25.6% (2005: 26.3%).

(d) Tax on items charged to equity
In addition to the amount charged to the Group income statement tax amounting to £5m (2005: £7m) has been credited directly to equity, relating mainly to share schemes and foreign exchange.

(e) Factors that may affect future tax charges
In the foreseeable future, the Group's tax charge will continue to be influenced by the profile of profits earned in the different countries in which the Group’s businesses operate.