Notes to the Accounts For the year ended 31 December 2007

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6. Taxation on profits on ordinary activities

The charge for taxation is based on the annual tax rate of 31.0% on profit before tax (2006: 32.5%).

Analysis of charge in year 2007

  2007
£'000
2006
£'000
UK income tax at 30% for year 22,518 17,694
Adjustments in respect of prior periods (1,141) 1,228
Overseas income tax 23,866 14,515
  45,243 33,437
 
Deferred tax expense    
Origination and reversal of temporary differences (1,228) (1,168)
Reduction in tax rate (16) 31
Charge/(benefit) of tax losses recognised 1,708 (788)
Deferred tax expense 464 (1,925)
Total income tax expense in the income statement 45,707 31,512

Reconciliation of effective tax rate

  2007
£'000
% 2006
£'000
%
Profit before taxation 147,441   96,959  
Profit on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK 44,232 30.0 29,088 30.0
Effects of:        
Disallowable items and other permanent timing differences 715 0.5 594 0.6
Unrelieved overseas losses 416 0.3 361 0.4
Utilisation of losses not previously recognised (191) (0.2)
Recognition of further losses not previously recognised (948) (1.0)
Higher tax rates on overseas earnings 1,485 1.0 1,637 1.7
Adjustment to tax charge in respect of prior periods (1,141) (0.8) 971 1.0
Tax expense and effective rate for the year 45,707 31.0 31,512 32.5
Tax recognised directly in equity 2007
£'000
2006
£'000
Relating to equity settled transactions 833 (8,302)

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