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3. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge comprises:
2016
2015
£
£
CURRENT TAX ON PROFIT ON ORDINARY ACTIYITES:
UK corporation tax on the profit in the current year
61,812
105,650
Adjustments in respect of prior periods
(90,822)
—
Total current tax
(29,010)
105,650
DEFERRED TAXATION
Origination and reversal of timing differences
5,194
49,983
Effect of rate changes
(12,336)
(2,197)
Adjustments in respect of prior periods
6,598
—
(544)
47,786
Total tax (credit)/charge on surplus on ordinary activities
(29,554)
153,436
The Finance Act 2015 has provided that from 1 April 2017 taxable profits will be taxed at the rate of 19% and
from 1 April 2020 will be taxed at 18%. The above rate changes will rednce the future tax liabilities of the Branch.
Proposed in the Finance Bill 2016 but not yet enacted is a fm1her reduction in the tax rate to 17% from 1 April
2020. The impact of this proposal would be a fmiher reduction in the deferred tax balance of approximately
£6,000.
Profit for the year before tax
70,711
208,442
Profit at standard rate of corporation tax of 20% (2015: 20.92%)
14,142
43,607
Effects of:
Expenses, net of income, not deductible
52,864
112,027
Impact of rate changes
(12,336)
(2,197)
Adjustments in respect of prior periods
(84,224)
—
Total tax (credit)/charge for year
(29,554)
153,436
DEFERRED TAXATION
Accelerated capital allowances
111,036
111,580
Deferred tax liability at 1 May
111,580
63,794
Deferred tax charge
(544)
47,786
Deferred tax liability at 30 April at 18%
111,036
111,580
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 APRIL 2016
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