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Notes to the Bank financial statements continued
For the year ended 31 December 2013
All amounts are stated in £m unless otherwise indicated
35. Deferred tax
In plain english:
This note describes the tax that the Bank may have to pay in future. Deferred tax arises from differences in the way that tax is calculated for accounts
purposes and tax purposes.
Deferred taxes are calculated on all temporary differences under the liability method using a tax rate of 20% (2012: 23%).
The movements on the deferred tax accounts are as follows:
2013 2012
Note
Deferred
tax asset
Deferred
tax liability
Total
Deferred
tax asset
Deferred
tax liability
Total
Deferred tax at the beginning of the year 159.6 (121.4) 38.2 130.2 (103.8) 26.4
(Charged)/credited to the income statement:
Current year (23.6) 28.9 5.3 15.1 (6.3) 8.8
Write off of prior year deferred tax asset 14 (157.5) – (157.5) – – –
Prior year 3.3 – 3.3 9.3 (2.4) 6.9
(177.8) 28.9 (148.9) 24.4 (8.7) 15.7
Credited/(charged) to other comprehensive income:
Fair value unwinds – – – 8.9 (8.9) –
Cashflow hedges 18.1 – 18.1 3.5 – 3.5
Available for sale 0.1 – 0.1 (7.4) – (7.4)
18.2 – 18.2 5.0 (8.9) (3.9)
Deferred tax at the end of the year – (92.5) (92.5) 159.6 (121.4) 38.2
The deferred tax asset above includes an offset for those deferred tax liabilities that are permissible to be offset.
The 2012 balance sheet comparatives have been re-presented to reflect that certain deferred tax liabilities cannot be offset against the deferred tax assets.
Deferred
tax asset
2013 2012
Deferred
tax liability
Deferred
tax asset
Deferred
tax liability
Deferred tax comprises:
Capital allowances on fixed assets and assets leased to customers 1.4 – 34.7 –
Fair value adjustments – The Co-operative Bank plc – – 65.6 –
Fair value adjustments – The Co-operative Bank subsidiaries – (92.5) – (121.4)
Other temporary differences – – 26.1 –
Tax losses carried forward – – 51.9 –
Pensions and other post-retirement benefits – – 0.9 –
Cashflow hedges (0.8) – (18.9) –
Unrealised appreciation on investments (0.6) – (0.7) –
– (92.5) 159.6 (121.4)
Net deferred tax assets expected to be recoverable after one year are £nil (2012: £159.6m).
Other temporary differences for the Bank of £nil (2012: £26.1m) include deferred tax assets/liabilities as a result of loss provisions on mortgage assets held
by Special Purpose Entities (SPEs), taxation of SPEs under the securitisation regime and spreading of the tax effect of IFRS transitional adjustments.
The Directors consider the recoverability of deferred tax to be a critical accounting judgement. Further detail is provided in note 2.
The Co-operative Bank plc Annual report and accounts 2013
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