Strategic report Governance Financial statements Other information SECTION 1: RESULTS FOR THE YEAR NOTES TO THE GROUP FINANCIAL STATEMENTS INCOME STATEMENT CONTINUED 1.8 Tax continued Year ended Year ended The charge for the year can be reconciled to the profit per the income statement as follows: 30 June 2021 30 June 2020 £m £m Year ended Year ended Current tax: on profits for the year 70.4 64.9 30 June 2021 30 June 2020 Current tax: adjustments in respect of prior years (0.1) 0.3 £m £m Deferred tax (note 2.8) (0.6) 0.4 Profit before tax 366.0 378.3 Deferred tax: adjustments in respect of prior years (note 2.8) – (0.5) Tax at the standard UK corporation tax rate of 19.0% (2020: 19.0%) 69.5 71.9 69.7 65.1 Non-taxable income – – Non-taxable gain on disposal of subsidiary – (7.4) Corporation tax is calculated at 19% of the estimated assessable profit for the year to 30 June 2021 Items not allowable for tax 0.5 0.7 (2020: 19%). Adjustments in respect of prior years (0.1) 0.1 Impact of the change in tax rate (0.2) (0.2) In addition to the amount charged to the consolidated income statement, certain tax amounts have Tax expense for the year 69.7 65.1 been charged or (credited) directly to equity as follows: Effective tax rate 19.0% 17.2% Year ended Year ended Factors affecting future tax charge 30 June 2021 30 June 2020 £m £m Any increase or decrease to the share price of Hargreaves Lansdown plc will impact the amount Deferred tax relating to share based payments (0.2) 0.7 of tax deduction available in future years on the value of shares acquired by staff under share Current tax relating to share based payments 1.1 (0.9) incentive schemes. 0.9 (0.2) Factors affecting tax charge for the year It is expected that the ongoing effective tax rate will remain at a rate approximating to the standard UK corporation tax rate in the medium term, except for the impact of deferred tax arising from the timing of exercising of share options which is not under our control. Following the enactment of Finance Act 2021 the standard UK corporation tax rate will remain at 19% before increasing to 25% from 1 April 2023. Accordingly, the Group’s taxable profits for this accounting year are taxed at 19%. Deferred tax has been recognised at either 19% or 25% depending on the rate expected to be in force at the time of the reversal of the temporary difference. This is an increase from the rate of only 19% used in the prior year. A deferred tax asset in respect of future share option deductions has been recognised based on the Company’s share price as at 30 June 2021. 148 Hargreaves Lansdown Report and Financial Statements 2021