TAXATION

12 Months Ended

Dec. 31, 2018

Disclosure of income tax [text block] [Abstract]

Disclosure of income tax [text block]

NOTE 14: TAXATION

(A) Analysis of tax expense for the year

	2018 £m			2017 £m			2016 £m
UK corporation tax:
Current tax on profit for the year		(1,386	)		(1,342	)		(1,010	)
Adjustments in respect of prior years		11			122			156
		(1,375	)		(1,220	)		(854	)
Foreign tax:
Current tax on profit for the year		(34	)		(40	)		(20	)
Adjustments in respect of prior years		5			10			2
		(29	)		(30	)		(18	)
Current tax expense		(1,404	)		(1,250	)		(872	)
Deferred tax:
Current year		(127	)		(430	)		(758	)
Adjustments in respect of prior years		(29	)		(48	)		(94	)
Deferred tax expense		(156	)		(478	)		(852	)
Tax expense		(1,560	)		(1,728	)		(1,724	)

The income tax expense is made up as follows:
	2018 £m		2017 £m		2016 £m
Tax (expense) credit attributable to policyholders	14		(82	)	(301	)
Shareholder tax expense	(1,574	)	(1,646	)	(1,423	)
Tax expense	(1,560	)	(1,728	)	(1,724	)

(B) Factors affecting the tax expense for the year

The UK corporation tax rate for the year was 19.0 per cent (2017: 19.25 per cent; 2016: 20 per cent). An explanation of the relationship between tax expense and accounting profit is set out below:

	2018 £m			2017 £m			2016 £m
Profit before tax		5,960			5,625			3,888
UK corporation tax thereon		(1,132	)		(1,083	)		(778	)
Impact of surcharge on banking profits		(432	)		(452	)		(266	)
Non-deductible costs: conduct charges		(101	)		(287	)		(289	)
Non-deductible costs: bank levy		(43	)		(44	)		(40	)
Other non-deductible costs		(90	)		(59	)		(135	)
Non-taxable income		87			72			75
Tax-exempt gains on disposals		124			128			19
(Derecognition) recognition of losses that arose in prior years		(9	)		–			59
Remeasurement of deferred tax due to rate changes		32			(9	)		(201	)
Differences in overseas tax rates		6			(15	)		10
Policyholder tax		(62	)		(66	)		(57	)
Policyholder deferred tax asset in respect of life assurance expenses		73			–			(184	)
Adjustments in respect of prior years		(13	)		88			64
Tax effect of share of results of joint ventures		–			(1	)		(1	)
Tax expense		(1,560	)		(1,728	)		(1,724	)