Taxation expense for the year represents current tax recognised in the reporting period and is recognised in the statement of comprehensive income. Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the year end. Current taxation assets and liabilities are not discounted. The Company has no corporation tax charge due to losses being carried forward.
Deferred tax assets are recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax assets and liabilities are measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply in the periods in which any timing differences are expected to reverse. Deferred tax assets and liabilities are not discounted. No deferred tax asset has been recognised for the current or previous year.
On 3 March 2021, the government announced its intention to increase the corporation tax rate from 1 April 2023. This rate will taper from 19% for businesses with profits of less than £50,000 to 25% for businesses with profits over £250,000. This is anticipated to be substantively enacted once the Finance Bill 2021 passes the House of Commons. The unrecognised deferred tax asset at the reporting date has been measured using the currently enacted tax rate being 19%.