10. Taxation

Taxation charge based on profits for the year

The major components of income tax charge are:

2016
£000
2015
£000
Current income tax from continuing operations
UK corporation tax at 20% (2015: 20.9%)9751,845
Adjustments in respect of prior periods(1,953)(1,785)
Foreign tax:
Current period1,213973
Adjustments in respect of prior periods(83)7
1521,040
Deferred income tax from continuing operations
UK origination and reversal of timing differences(2,677)(1,875)
Adjustments in respect of prior periods(1,064)85
Impact of change in tax rates(1,138)
(4,879)(1,790)
Income tax credit from continuing operations reported in the consolidated income statement(4,727)(750)
The tax credit is analysed between:
Tax on profit from continuing operations before special items4,1813,269
Tax on special items relating to continuing operations(5,204)(2,707)
Special tax item — prior year Patent Box credit(1,312)
Special tax item — recognition of capital losses(1,078)
Special tax item — recognition of capital allowances(955)
Special tax item — other prior year adjustments(534)
Special tax item — deferred tax credit as a result of the UK Corporate rate change(1,137)
(4,727)(750)
Tax on items taken to equity from continuing and discontinued operations
Current tax:
Exchange movements recognised in reserves11166
Share-based payments(308)(304)
(297)(138)
Deferred tax:
Actuarial (gains)/losses on pension scheme(1,055)(3,348)
Share-based payments302(255)
Impact of change in tax rates588
(165)(3,603)
Total tax charged/(credited) to equity(462)(3,741)

Reconciliation between tax expense and the Group's profit on ordinary activities before taxation

The reconciliation of the UK statutory tax charge to the Group's profit on ordinary activities before taxation is as follows:

2016
£000
2015
£000
Profit before tax from continuing operations11,2415,512
Taxation charge at UK corporation tax rate of 20% (2015: 20.9%)2,2481,152
Adjustments in respect of prior periods(3,099)(1,693)
Tax effect of non-deductible or non-taxable items(1,487)131
Adjustments in respect of foreign tax rates(502)(65)
Deferred tax on share-based payments(157)(50)
Movement in unprovided deferred tax(593)(225)
Special tax item — rate change adjustment(1,137)
(4,727)(750)

Factors affecting future tax charge

The standard rate of corporation tax in the UK reduced from 21% to 20% with effect from 1 April 2015. Accordingly, the UK profits for this accounting period are taxed at an effective rate of 20%. Further reductions in the standard rate to 19% with effect from 1 April 2017 and 18% with effect from 1 April 2020 were enacted during the year and any deferred tax balances have been stated at the rate at which they are expected to reverse. The Budget in March 2016 announced that the standard rate will fall further to 17% with effect from 1 April 2020. As this rate was not substantively enacted by the balance sheet date, it has not been reflected in these financial statements.

Unrecognised tax losses

The Group has capital losses which arose in the UK of £21,921,000 (2015: £27,313,000) that are available for offset against future chargeable gains in the UK group. Deferred tax assets have not been recognised in respect of these losses as it is not reasonably foreseeable that these will be utilised.

Deferred tax assets of £3,409,997(2015: £4,318,730) in respect of tax losses carried forward have not been recognised due to insufficient certainty over their recoverability. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

Deferred tax

GroupCompany
2016
£000
*Restated
2015
£000
2016
£000
2015
£000
Deferred tax liabilities
Accelerated tax depreciation(10,453)(10,912)
Intangibles(16,983)(19,577)
(27,436)(30,489)
Deferred tax assets
Tax losses8,3829,88127,3135,463
Less not recognised(7,356)(9,781)(27,313)(5,463)
Tax losses recognised1,026100
Accelerated tax depreciation913
Share-based payments1,3051,5347021,120
Provisions and deferred income1,8062,590239
Other timing differences(75)290
Retirement benefit obligations4,8033,574
8,8658,0887341,142
Net deferred tax (liability)/asset(18,571)(22,401)7341,142
Assets8,8658,0887341,142
Liabilities(27,436)(30,489)
Net deferred tax (liability)/asset(18,571)(22,401)7341,142
Provision for deferred tax
At 1 May(22,401)(3,429)1,142963
Arising on acquisition of new subsidiaries*(25,783)
Adjustments in respect of prior periods1,064
Charged to the income statement:
– Retirement benefit obligations(120)51
– Provisions(229)(103)17(93)
– Share-based payments157514854
– Accelerated capital allowances(520)(321)(3)(2)
– Inventory584
– Losses(247)
– Derivatives(23)22
– Intangible assets3,4121,699
– Other90
Impact of change in tax rates in income statement1,137(12)
Impact of change in tax rates in equity(588)(5)
(Credit)/charge to equity7523,603(453)220
Exchange differences(1,212)1,382
At 30 April(18,571)(22,401)7341,142

* Restated (see note 28)

The amount of deferred tax liability likely to be settled within 12 months is £3.5m (2015: £3.5m).

Deferred tax assets in the Company are recognised on the basis that their reversal in the future will generate current year losses which will be surrendered to subsidiary undertakings in exchange for payment at the prevailing tax rate.