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 profit and loss 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.
Provision is made for Deferred Taxation using the liability method to take account of timing differences between the incidence of income and expenditure for taxation and accounting purposes, that have originated, but not reversed at the Balance Sheet date.