Annual Report and Accounts 2009

Notes to the Consolidated Financial Statements for the year to 31 December 2009

15. Deferred tax

The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior reporting year.

  Capital
allowances
£m
Short term
timing
differences
£m
Brands
£m
Inventory
adjustments
£m
Retirement
benefit
obligations
£m
Total
£m
At 1 January 2008 4.2 10.0 (29.8) 40.1 63.4 87.9
(Charge)/credit to income (5.5) (3.0) 29.8 (46.1) (39.7) (64.5)
Charge to equity (23.7) (23.7)
Disposal of subsidiaries (0.4) (0.4)
Changes in exchange rates 6.0 6.0
At 31 December 2008 (1.3) 6.6 5.3
Credit/(charge) to income 0.1 (1.9) 27.1 25.3
Credit to equity 87.6 87.6
Disposal of subsidiaries 0.4 0.4
Changes in exchange rates 0.2 0.2
At 31 December 2009 (0.8) 4.9 114.7 118.8

In 2009 the Group has reinstated the deferred tax asset relating to the pension deficit, including £47.2m written off in the prior year, on the basis that the deficit is a long term liability of circa 15 years that will be satisfied from future profitability.

In the prior year the £23.7m charge to equity comprised £23.5m credited directly to equity in respect of deferred tax on actuarial losses on the defined benefit pension scheme taken to the statement of recognised income and expense and a charge of £47.2m to equity in respect of the write off of the deferred tax asset on retirement benefit obligations.

The Group also reduced its deferred tax assets in the prior year on losses, capital allowances, short term timing differences and inventory write downs to reflect the weakening market and worsening economic conditions.

The deferred tax liability on brands was eliminated in 2008 following the decision to fully impair those brands.

The net deferred tax balance is analysed into assets and liabilities as follows:

  2009
£m
2008
£m
Deferred tax assets 119.6 6.6
Deferred tax liabilities (0.8) (1.3)
  118.8 5.3

At the balance sheet date, the Group has unused UK capital losses of £409.2m (2008: £409.2m), of which £271.7m (2008: £271.7m) are agreed as available for offset against future capital profits. No deferred tax asset has been recognised in respect of these losses because the Group does not believe that it is probable that these capital losses will be utilised in the foreseeable future. In addition, some of the capital losses would be further restricted as to offset dependent on the source within the Taylor Wimpey Group of any gains and previous losses.

The Group has not recognised potential deferred tax assets relating to inventory charges and tax losses carried forward amounting to £375.1m (2008: £248.3m) in the UK , £267.0m (2008: £303.6m) in the US and £21.4m (2008: £17.3m) in other jurisdictions. Local tax legislation permits losses to be carried forward 20 years in the US, 15 years in Spain and indefinitely in the UK.