Annual Report and Accounts 2009

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

8. Tax

Tax (credited to)/charged in the income statement for continuing operations is analysed as follows:

    2009
£m
2008
£m
Current tax:
UK corporation tax: Current year 1.1 (124.3)
  Prior years (5.5) 6.0
Foreign tax: Current year (32.0) (22.8)
  Prior years 2.4
    (34.0) (141.1)
Deferred tax:
UK: Current year (25.4) 32.7
Foreign: Current year 0.4 31.8
  Prior years (0.3)
  (25.3) 64.5
  (59.3) (76.6)

Corporation tax is calculated at 28.0% (2008: 28.5%) of the estimated assessable loss (2008: loss) 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's statement of comprehensive income is due to actuarial losses on post-retirement liabilities at the prevailing rate in the relevant jurisdiction, and the reinstatement of the deferred tax asset relating to post-retirement liabilities. The UK rate of corporation tax reduced from 30% to 28% from 1 April 2008.

The tax credit for the year includes an amount in respect of exceptional items of £73.6m (2008: £100.0m credit). This is made up of a credit of £25.4m (2008: £91.6m) in respect of UK tax and a credit of £48.2m (2008: £8.4m charge) in respect of US tax. The credit in the UK relates to the reinstatement of the pension deferred tax asset on the Group's defined benefit pension scheme and the credit in the US relates to the five year net operating loss carryback introduced as part of an economic stimulus package in the US in November 2009.

The credit for the year can be reconciled to the loss per the income statement as follows: 2009
£m
2008
£m
Loss before tax (699.9) (1,969.7)
Tax at the UK corporation tax rate of 28% (2008: 28.5%) (196.0) (561.4)
(Over)/under provision in respect of prior years (3.4) 6.0
Tax effect of expenses that are not deductible in determining taxable profit 8.0 205.6
Non-taxable income (3.7) (8.4)
Effect of higher rates of tax of subsidiaries operating in other jurisdictions (6.9) (1.4)
Losses not recognised 186.0 217.2
Net reduction in deferred tax assets previously recognised 65.8
Reinstatement of pension deferred tax asset (29.6)
Temporary differences not recognised (13.7)
Tax credit for the year (59.3) (76.6)