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Make_the_music_stop t1_ixc9qwo wrote

Reply to comment by Jordy_Pordy in [OC] Royal Mail, Europe's 3rd largest postal service by market cap - breaking down its 2021 annual report by giteam

Capital allowances probably. UK has one of the longest most complicated tax codes in the world.

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Jordy_Pordy t1_ixccnnk wrote

Possibly capital allowances, but that would affect overall tax payable, not necessarily the rate of tax?

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Make_the_music_stop t1_ixce1gv wrote

Maybe? I don't know. I assumed the effective tax rate of 19% down to their 7.6% was down to allowances, adjustments and fancy accounting.

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Jordy_Pordy t1_ixcenyn wrote

Capital allowances, from what I recall, only applies to the tax burden, and not the tax rate. It could be possible that it is a form of subsidised tax rate specifically for Royal Mail. But from a further look at the statements, page 57 shows the adjustments, with 19% being the effective rate. So possibly an error on OPs part.

edit: nevermind, effective tax rate is 7.6%, down by 11.4%, due to remeasurements of deferred tax, net pension credit interest, and uncertain tax provisions.

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tscello t1_ixcmck0 wrote

curious — are capital allowances similar/the same thing as capital tax rebates that corporations receive incentively from their government?

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Jordy_Pordy t1_ixd3no1 wrote

Quite possibly, from what I have done so far with them, they are just allowances to reduce the tax burden relating to capital assets. But yes, I think they are incentivised via the government to encourage larger corporations.

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