Section image
Cherries
oil on canvas
22 x 20 in
1981
Penny Machines
oil on canvas
23¾ x 29¾ in
1961
Stack of Books
oil on canvas
30 x 24 in
n.d.
Seven Suckers
oil on canvas
19 x 23 in
1970
Twin Jackpots
oil on canvas
30 x 46 in
1962
Ties
oil on canvas
20 x 26 in
1980
Notes 6-10
For the year ended 31 December 2010
- 6. Finance income, finance costs and revaluation of financial instruments
- 7. Taxation
- 8. Ordinary dividends
- 9. Earnings per share
- 10. Sources of finance
7. Taxation
The tax charge is based on the profit for the year and comprises:
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Corporation tax | |||
| Current year | 276.2 | 209.8 | 217.7 |
| Prior years | (1.0) | (1.7) | 7.0 |
| 275.2 | 208.1 | 224.7 | |
| Deferred tax | |||
| Current year | (21.4) | (16.1) | (8.4) |
| Net credit in relation to the amortisation of acquired intangible assets and other goodwill items | (37.5) | (37.3) | (12.4) |
| (58.9) | (53.4) | (20.8) | |
| Prior years | (26.0) | 1.0 | 29.0 |
| (84.9) | (52.4) | 8.2 | |
| Tax charge | 190.3 | 155.7 | 232.9 |
The tax charge for the year can be reconciled to profit before taxation in the consolidated income statement as follows:
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Profit before taxation | 851.3 | 662.6 | 746.8 |
| Tax at the corporation tax rate of 25%3 (2009: 25%3, 2008: UK 28.5%) | 212.8 | 165.7 | 212.8 |
| Tax effect of share of results of associates | (13.8) | (14.3) | (13.4) |
| Tax effect of items that are not taxable | (7.8) | (63.7) | (11.7) |
| Tax effect of utilisation or recognition of tax losses not previously recognised | (47.5) | (10.1) | (6.5) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | 15.4 | 23.7 | 3.5 |
| Losses carried forward and temporary differences not recognised | 58.2 | 55.1 | 12.2 |
| Prior period adjustments | (27.0) | (0.7) | 36.0 |
| Tax charge | 190.3 | 155.7 | 232.9 |
| Effective tax rate on profit before tax | 22.4% | 23.5% | 31.2% |
| Effective tax rate on headline PBT1,2 | 22.0% | 23.8% | 25.3% |
- Notes
- 1
- Headline PBT and the effective tax rate on headline PBT are defined in note 31.
- 2
- Excluding the net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items.
- 3
- In November 2008, WPP introduced a new holding company that is tax resident in the Republic of Ireland. As a result, the tax reconciliation for the years ended 31 December 2010 and 31 December 2009 have been prepared using the Irish non-trading corporation tax rate of 25%, which is the rate applicable to WPP plc. In 2008 the reconciliation was prepared using the prevailing UK corporation tax rate of 28.5%.