The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 65
THE EDINBURGH INVESTMENT TRUST PLC / FINANCIAL REVIEW / 63
6. TAX AND TOTAL RETURN ON ORDINARY ACTIVITIES
As an investment trust the Company pays no tax on capital gains. As the Company invests principally in UK equities,
it has little overseas tax and the overseas tax charge is the result of withholding tax deducted at source. This note also
clarifies the basis for the Company having no deferred tax asset or liability.
(a) Tax charge
Overseas taxation
2022
£’000
2021
£’000
663
495
2022
£’000
2021
£’000
141,581
279,046
26,900
53,019
(6,128)
(4,945)
(b) Reconciliation of tax charge
Return on ordinary activities before taxation
Theoretical tax at the current UK Corporation Tax rate of 19% (2021: 19%)
Effects of:
– Non-taxable UK dividends
– Non-taxable UK special dividends
– Non-taxable overseas dividends
– Non-taxable gains on investments
– Non-taxable losses on foreign exchange
– Excess of allowable expenses over taxable income
– Disallowable expenses
(972)
(2,560)
(3,178)
(830)
(19,345)
(47,037)
28
11
2,693
2,340
2
2
– Overseas taxation
663
495
Tax charge for the year
663
495
(c) Deferred tax
Owing to the Company’s status as an investment company, and the Directors’ intention that it continues to meet the conditions required
to maintain that approval in the foreseeable future, no deferred tax has been provided on any capital gains and losses arising on the
revaluation or disposal of investments.
(d) Factors that may affect future tax changes
The Company has cumulative excess management expenses of £491,547,000 (2021: £477,190,000) that are available to offset future
taxable revenue.
A deferred tax asset of £122,886,688 (2021: £90,666,112) at 25% (2021: 19%) has not been recognised in respect of these expenses since
the Directors believe that there will be no taxable profits in the future against which the deferred tax assets can be offset.