10. Taxation

Taxation charge based on profits for the year

The major components of income tax expense are:

2013
£000
2012*
£000
Current income tax from continuing operations
UK corporation tax at 23.9% (2012: 25.8%)4,1324,471
Adjustments in respect of prior periods(242)(1,573)
3,8902,898
Deferred income tax from continuing operations
UK origination and reversal of timing differences135(599)
Adjustments in respect of prior periods(138)1,333
Impact of change in tax rates(317)(631)
(320)103
Income tax expense from continuing operations reported in the consolidated income statement3,5703,001
The tax charge is analysed between:
Tax on profit from continuing operations before special items3,1942,972
Tax on special items relating to continuing operations(376)29
Special tax item — deferred tax charge as a result of change of use of industrial building752
3,5703,001
Tax on items taken to equity from continuing and discontinued operations
Current tax:
Actuarial losses on pension scheme(7)(491)
Exchange movements recognised in reserves2482
Share-based payments(121)
(104)(409)
Deferred tax:
Actuarial gains and losses on pension scheme(2,016)790
Share-based payments(260)(292)
Cash flow hedges38(49)
Impact of change in tax rates210234
(2,028)683
Total tax (credited)/charged to equity(2,132)274

* Restated (see note 1).

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:

2013
£000
2012*
£000
Profit before tax from continuing operations14,66714,887
Taxation charge at UK corporation tax rate of 23.9% (2012: 25.8%)3,5053,841
Adjustments in respect of prior periods(380)(240)
Tax effect of non-deductible or non-taxable items137230
Rate change adjustment(317)(631)
Deferred tax on share-based payments(127)(199)
Special tax item — deferred tax charge as a result of change of use of industrial buildings752
3,5703,001

* Restated (see note 1).

Factors affecting future tax charge

In June 2012, the UK Government enacted the reduction in the main rate of UK corporation tax from 24% to 23% from 1 April 2013. Further rate reductions to 21% from 1 April 2014 and 20% from 1 April 2015 have also been announced but are not yet substantively enacted. Therefore, the UK deferred tax assets and liabilities included within these financial statements have been provided at a rate of 23%. The forecast effect of the further proposed reductions in rate by 2015 would be to decrease the net deferred tax liability by approximately £0.3m.

Unrecognised tax losses

The Group has capital losses which arose in the UK of £27,313,000 (2012: £28,713,000) 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 £1,783,000 (2012: £1,860,000) 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
2013
£000
2012
£000
2013
£000
2012
£000
Deferred tax liabilities
Accelerated tax depreciation(6,429)(10,584)
(6,429)(10,584)
Deferred tax assets
Tax losses8,0649,5546,2826,555
Less not recognised(8,064)(9,550)(6,282)(6,555)
Tax losses recognised4
Share-based payments1,184915847374
Provisions1451,1289517
Other timing differences131854136
Retirement benefit obligations2,706807
4,0483,039946527
Net deferred tax (liability)/asset(2,381)(7,545)946527
Assets946527
Liabilities(2,381)(7,545)
Net deferred tax (liability)/asset(2,381)(7,545)946527
Provision for deferred tax
At 1 May(7,545)(6,711)527356
Charged to the income statement
Adjustments to prior period:
– Provisions103(24)1545
– Share-based payments(28)
– Accelerated capital allowances(12)(1,264)2
– Derivatives(5)
Current period (charge)/credit(200)598(24)126
Impact of change in tax rates331696(41)(28)
Credit/(charge) to equity2,028(812)33066
Disposal of subsidiaries2,919
At 30 April(2,381)(7,545)946527