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Financial Statements

19.Deferred tax assets and liabilities

The following are the major deferred tax assets and liabilities recognised, and the movements thereon, during the current and prior reporting periods:

	Accelerated tax depreciation £m	Employee share options £m	Pensions and other post- retirement benefits £m	Financial instruments £m	Other net temporary differences £m	Total £m
Deferred tax assets at 31 March 2005	-	(18)	(462)	-	(931)	(1,411)
Deferred tax liabilities at 31 March 2005	4,098	-	-	-	184	4,282
At 31 March 2005	4,098	(18)	(462)	-	(747)	2,871
First time adoption of IAS 39	-	-	-	38	(54)	(16)
At 1 April 2005	4,098	(18)	(462)	38	(801)	2,855
Exchange adjustments	60	-	(10)	-	(72)	(22)
Charged/(credited) to income statement	31	(3)	25	(4)	130	179
(Credited)/charged to equity	-	(7)	62	(20)	1	36
Disposal of subsidiary undertakings	(1,608)	-	-	-	9	(1,059)
Other	-	-	(12)	-	25	13
At 31 March 2006	3,121	(28)	(397)	14	(708)	2,002
Deferred tax assets at 31 March 2006	(5)	(28)	(397)	(6)	(835)	(1,271)
Deferred tax liabilities at 31 March 2006	3,126	-	-	20	127	3,273
At 1 April 2006	3,121	(28)	(397)	14	(708)	2,002
Exchange adjustments	(90)	-	13	-	91	14
Charged/(credited) to income statement	321	9	82	(9)	54	457
(Credited)/charged to equity	-	(11)	70	11	-	70
Acquisition of subsidiary undertakings	-	-	2	-	(13)	(11)
Reclassification to liabilities of businesses held for sale	(129)	1	1	-	3	(124)
Other	63	-	(238)	5	151	(19)
At 31 March 2007	3,286	(29)	(467)	21	(422)	2,389
Deferred tax assets at 31 March 2007	(4)	(29)	(532)	(9)	(452)	(1,026)
Deferred tax liabilities 31 March 2007	3,290	-	65	30	30	3,415
	3,286	(29)	(467)	21	(422)	2,389

Deferred tax charged to the income statement includes £14m (2006: £49m; 2005: £49m) reported within profits for the year from discontinued operations.

Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is intention to settle the balances net. The following is an analysis of the deferred tax balances (after offset) for balance sheet purposes:

	2007 £m	2006 £m
Deferred tax liabilities	2,389	2,161
Deferred tax assets	-	(159)
	2,389	2,002

At the balance sheet date there were no material current deferred tax assets or liabilities (2006: £nil).

Deferred tax assets in respect of capital losses, non-trade deficits, trading losses and pre-trading expenditure have not been recognised as their future recovery is uncertain or not currently anticipated. The deferred tax assets not recognised are as follows:

	2007 £m	2006 £m
Capital losses	216	338
Non-trade deficits	203	166
Trading losses	3	17
Pre-trading expenditure	-	9

The capital losses, non-trade deficits, trading losses and pre-trading expenditure are available to carry forward indefinitely. The capital losses can be offset against specific types of future capital gains, non-trade deficits against specific future non-trade profits and the trading losses and pre-trading expenditure against specific future trading profits.

The aggregate amount of temporary differences associated with the unremitted earnings of overseas subsidiaries and joint ventures for which deferred tax liabilities have not been recognised at the balance sheet date is approximately £811m (2006: £546m). No liability is recognised in respect of the differences because the Company and its subsidiaries are in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

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