Meggitt PLC – Annual report – 31 December 2017
14. Tax (extract)
On 22 December 2017, the US government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The TCJA makes substantial changes to the Internal Revenue Code of 1986, as amended. Among those changes is a significant reduction in the generally applicable US federal corporate tax rate from 35% to 21%, with effect from 1 January 2018. The Group’s deferred tax balances relating to its US operations have been remeasured to reflect this rate reduction. The impact of the rate reduction is a credit to the income statement of £122.6m, a charge to other comprehensive income of £11.7m in respect of retirement benefit obligations, a charge recognised directly in equity of £0.3m in respect of share-based payments and a corresponding reduction in deferred tax liabilities of £110.6m.
The Finance (No 2) Act 2015, included legislation to reduce the main rate of corporation tax in the UK from 20% to 19% with effect from 1 April 2017 and to 18% with effect from 1 April 2020. The Finance Act 2016, included legislation to further reduce the main rate of corporation tax in the UK to 17% from 1 April 2020. As these changes were substantively enacted in prior years, they have had no significant impact on the tax charge for the current year.