Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
In accordance with the requirements of FRS 102, deferred tax is provided in full using the liability method on temporary differences between the tax basis of assets and liabilities, and their carrying amounts in the accounts at the balance sheet date. A deferred tax asset is only recognised to the extent that it is probable that sufficient taxable profits will be available in the future for it to be utilised. Deferred taxation is measured on a non-discounted basis at the tax rates that would apply when the timing differences reverse, based on tax rates and laws that have been enacted - or substantively enacted - by the balance sheet date.
Current or deferred tax for the year is recognised in profit or loss, except when they related to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively.