Income tax expense represents the tax currently payable.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from the profit reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates and legislation that have been enacted or substantively enacted by the end of the reporting period.
Current tax is recognised in the profit and loss account, except where it relates to items recognised directly in equity or other comprehensive income, in which case the related tax effect is also recognised directly in equity or other comprehensive income.
The company reported taxable profits in both the current and prior year, and corporation tax liabilities have been recognised accordingly in the financial statements.