Tax expense represents the total of current tax and deferred tax.
Current tax is based on the taxable profit for the year. Taxable profit differs from profit reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. Current tax is measured using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed by the reporting date. Deferred tax is also recognised on differences between the carrying amounts of assets measured at fair value and their tax bases.
Deferred tax assets are recognised only when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply when the timing differences reverse.
Current and deferred tax are recognised in the profit and loss account, except when they relate to items recognised in other comprehensive income or directly in equity, in which case the related tax is also recognised in other comprehensive income or directly in equity respectively.