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Tax (Tables) | 12 Months Ended
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Dec. 31, 2018
Text block [abstract] |
Summary of Tax on Profit | Tax on profit
|  | 2018 $m |  |  | 2017 Restated $m |  |  | 2016 Restated $m |
Income tax |  |  |  |  |  |  |  |  |  |  |  |
UK corporation tax at 19.00% (2017: 19.25%, 2016: 20.00%): |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 10 |  |  |  | 10 |  |  |  | 10 |
Benefit of tax reliefs on which no deferred tax previously recognised |  |  | 0 |  |  |  | — |  |  |  | (7 | )
Adjustments in respect of prior periods |  |  | 4 |  |  |  | (2 | ) |  |  | (1 | )
|  |  | 14 |  |  |  | 8 |  |  |  | 2 |
Foreign tax: |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 95 |  |  |  | 210 |  |  |  | 151 |
Benefit of tax reliefs on which no deferred tax previously recognised |  |  | (1 | ) |  |  | (13 | ) |  |  | — |
Adjustments in respect of prior periodsa |  |  | (13 | ) |  |  | 2 |  |  |  | (97 | )
|  |  | 81 |  |  |  | 199 |  |  |  | 54 |
Total current tax |  |  | 95 |  |  |  | 207 |  |  |  | 56 |
Deferred tax: |  |  |  |  |  |  |  |  |  |  |  |
Origination and reversal of temporary differences |  |  | 40 |  |  |  | (8) |  |  |  | 54 |
Changes in tax rates and tax lawsb |  |  | 1 |  |  |  | (59) |  |  |  | (2) |
Adjustments to estimated recoverable deferred tax assetsc |  |  | (2 | ) |  |  | (9) |  |  |  | (25) |
Adjustments in respect of prior periodsa |  |  | (1 | ) |  |  | (16) |  |  |  | 90 |
Total deferred tax |  |  | 38 |  |  |  | (92) |  |  |  | 117 |
Total income tax charge for the year |  |  | 133 |  |  |  | 115 |  |  |  | 173 |
Further analysed as tax relating to: |  |  |  |  |  |  |  |  |  |  |  |
Profit before exceptional itemsd |  |  | 160 |  |  |  | 203 |  |  |  | 185 |
Exceptional items: |  |  |  |  |  |  |  |  |  |  |  |
Tax on exceptional items (note 6) |  |  | (22 | ) |  |  | 2 |  |  |  | (12 | )
Exceptional tax (note 6) |  |  | (5 | ) |  |  | (90 | ) |  |  | — |
|  |  | 133 |  |  |  | 115 |  |  |  | 173 |
a | In 2016, included $83m in respect of a change in tax treatment being approved by the US tax authority.
b | In 2017, predominantly reflects a change in US tax rates following significant US tax reforms.
c | Represents a re-assessment of the recovery of recognised and off-balance sheet deferred tax assets in line with the Group’s profit forecasts.
d | Includes $94m (2017: $157m, 2016: $160m) in respect of US taxes.
Summary of Reconciliation of Tax Charge Including Gain on Disposal of Assets |
|  | Totala |  |  | Before exceptional items and System Fundb |
|  | 2018 % |  |  | 2017 Restated % |  |  | 2016 Restated % |  |  | 2018 % |  |  | 2017 Restated % |  |  | 2016 Restated % |
Reconciliation of tax charge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
UK corporation tax at standard rate |  |  | 19.0 |  |  |  | 19.3 |  |  |  | 20.0 |  |  |  | 19.0 |  |  |  | 19.3 |  |  |  | 20.0 |
Tax credits |  |  | (0.5 | ) |  |  | (0.5 | ) |  |  | (2.2 | ) |  |  | (0.3 | ) |  |  | (0.5 | ) |  |  | (2.2 | )
System Fund resultsd |  |  | 5.0 |  |  |  | 0.9 |  |  |  | (1.2 | ) |  |  | (0.5 | ) |  |  | (0.4 | ) |  |  | (0.2 | )
Other permanent differences |  |  | 0.6 |  |  |  | 0.8 |  |  |  | 3.5 |  |  |  | 0.3 |  |  |  | 0.6 |  |  |  | 3.6 |
Non-recoverable withholding taxese |  |  | 0.7 |  |  |  | 0.3 |  |  |  | 0.7 |  |  |  | 0.5 |  |  |  | 0.3 |  |  |  | 0.7 |
Net effect of different rates of tax in overseas businessesc |  |  | 4.6 |  |  |  | 14.6 |  |  |  | 12.6 |  |  |  | 3.8 |  |  |  | 13.7 |  |  |  | 13.4 |
Effects of changes in tax rates resulting from significant US tax reform |  |  | 0 |  |  |  | (9.3 | ) |  |  | — |  |  |  | 0 |  |  |  | — |  |  |  | — |
Release of provision for taxation on unremitted earnings following significant US tax reform |  |  | 0 |  |  |  | (7.8 | ) |  |  | — |  |  |  | 0 |  |  |  | — |  |  |  | — |
Transition tax liability arising from significant US tax reform |  |  | 0 |  |  |  | 4.8 |  |  |  | — |  |  |  | 0 |  |  |  | — |  |  |  | — |
Effect of other changes in tax rates and tax laws |  |  | 0.3 |  |  |  | 0.3 |  |  |  | 0.3 |  |  |  | 0.2 |  |  |  | 0.3 |  |  |  | 0.3 |
Benefit of tax reliefs on which no deferred tax previously recognised |  |  | (0.4 | ) |  |  | (1.9 | ) |  |  | (1.1 | ) |  |  | (0.3 | ) |  |  | (1.8 | ) |  |  | (1.1 | )
Effect of adjustments to estimated recoverable deferred tax assets |  |  | 0.1 |  |  |  | (1.4 | ) |  |  | (4.0 | ) |  |  | 0.1 |  |  |  | (1.3 | ) |  |  | (4.0 | )
Adjustment to tax charge in respect of prior periods |  |  | (2.0 | ) |  |  | (2.6 | ) |  |  | (1.2 | ) |  |  | (1.0 | ) |  |  | (1.1 | ) |  |  | (1.1 | )
|  |  | 27.4 |  |  |  | 17.5 |  |  |  | 27.4 |  |  |  | 21.8 |  |  |  | 29.1 |  |  |  | 29.4 |
a | Calculated in relation to total profits including exceptional items.
b | Calculated in relation to profits excluding exceptional items and System Fund earnings.
c | Before exceptional items and System Fund includes 4.2%pt (2017: 13.3%pt, 2016: 12.2%pt) driven by the relatively high US federal tax rate.
d | The System Fund results are, in general, not subject to taxation.
e | In 2018, IHG recognised a benefit in respect of the offset of foreign taxes arising in 2018 against its 2017 tax. The Group does not anticipate such benefit in future periods, leading to an increase in irrecoverable tax by up to 2%pts on to the underlying rate before exceptional items and System Fund.
Reconciliation Between Total Tax Rate and Tax Rate Before Exceptional Items and System Fund | A reconciliation between total tax rate and tax rate before exceptional items and System Fund is shown below:
|  | 2018 |  |  | 2017 Restated |  |  | 2016 Restated |
|  | Profit $m |  |  | Tax $m |  |  | Rate % |  |  | Profit $m |  |  | Tax $m |  |  | Rate % |  |  | Profit $m |  |  | Tax $m |  |  | Rate % |
Group income statement |  |  | 485 |  |  |  | 133 |  |  |  | 27.4 |  |  |  | 656 |  |  |  | 115 |  |  |  | 17.5 |  |  |  | 632 |  |  |  | 173 |  |  |  | 27.4 |
Adjust for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exceptional items and tax (note 6) |  |  | 104 |  |  |  | 27 |  |  |  | 0 |  |  |  | (4 | ) |  |  | 88 |  |  |  |  |  |  |  | 29 |  |  |  | 12 |  |  |  |  |
System Fund revenue |  |  | (1,233 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (1,242 | ) |  |  | — |  |  |  |  |  |  |  | (1,199 | ) |  |  | — |  |  |  |  |
System Fund expenses |  |  | 1,379 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,276 |  |  |  | — |  |  |  |  |  |  |  | 1,164 |  |  |  | — |  |  |  |  |
Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | — |  |  |  | (3 | ) |  |  |  |  |  |  | — |  |  |  | (1 | ) |  |  |  |
|  |  | 735 |  |  |  | 160 |  |  |  | 21.8 |  |  |  | 686 |  |  |  | 200 |  |  |  | 29.1 |  |  |  | 626 |  |  |  | 184 |  |  |  | 29.4 |
Summary of Reconciliation of Tax Paid to Total Tax Charge in Income Statement | A reconciliation of tax paid to the total tax charge in the income statement follows:
|  | 2018 $m |  |  | 2017 $m |  |  | 2016 $m |
Current tax charge in the income statement |  |  | 95 |  |  |  | 207 |  |  |  | 56 |
Current tax credit in the statement of comprehensive income |  |  | (1 | ) |  |  | — |  |  |  | (12 | )
Current tax credit taken directly to equity |  |  | (8 | ) |  |  | (12 | ) |  |  | (8 | )
Total current tax charge |  |  | 86 |  |  |  | 195 |  |  |  | 36 |
Movements to tax contingencies within the income statementa |  |  | 4 |  |  |  | 3 |  |  |  | 11 |
Timing differences of cash tax paid and foreign exchange differencesb |  |  | (22 | ) |  |  | (26 | ) |  |  | 83 |
Tax paid per cash flow |  |  | 68 |  |  |  | 172 |  |  |  | 130 |
a | Tax contingency movements are included within the current tax charge but do not impact cash tax paid in the year.
b | The timing difference in 2016 was predominantly in respect of the US where the payment regulations resulted in a large overpayment in the year.
Summary of Deferred Tax | Deferred tax
|  | Property, plant, equipment and software $m |  |  | Other intangible assetsa $m |  |  | Application fees and contract costsa $m |  |  | Deferred gains on loan notes $m |  |  | Deferred gains on investments $m |  |  | Losses $m |  |  | Employee benefits $m |  |  | Undistributed earnings of subsidiariesb $m |  |  | Other short-term temporary differencesa,c $m |  |  | Totala $m |
At 1 January 2017 |  |  | 120 |  |  |  | (5 | ) |  |  | (36 | ) |  |  | 52 |  |  |  | 78 |  |  |  | (44 | ) |  |  | (27 | ) |  |  | 59 |  |  |  | (96 | ) |  |  | 101 |
Income statementc |  |  | (22 | ) |  |  | 13 |  |  |  | 11 |  |  |  | (18 | ) |  |  | (24 | ) |  |  | 1 |  |  |  | (4 | ) |  |  | (61 | ) |  |  | 12 |  |  |  | (92 | )
Statement of comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | (1 | ) |  |  | 4 |  |  |  | 13 |
Statement of changes in equity |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 3 |
Exchange and other adjustments |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 1 |  |  |  | 3 |  |  |  | (5 | ) |  |  | 1 |
At 31 December 2017 |  |  | 98 |  |  |  | 7 |  |  |  | (25 | ) |  |  | 34 |  |  |  | 54 |  |  |  | (40 | ) |  |  | (20 | ) |  |  | — |  |  |  | (82 | ) |  |  | 26 |
Income statement |  |  | 26 |  |  |  | 9 |  |  |  | (4 | ) |  |  | 1 |  |  |  | 2 |  |  |  | 4 |  |  |  | 0 |  |  |  | 2 |  |  |  | (2 | ) |  |  | 38 |
Assets of businesses acquired |  |  | (4 | ) |  |  | 11 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (10 | ) |  |  | (3 | )
Statement of comprehensive income |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2 |  |  |  | 0 |  |  |  | 2 |  |  |  | 4 |
Statement of changes in equity |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5 |  |  |  | 5 |
Exchange and other adjustments |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1 |
At 31 December 2018 |  |  | 120 |  |  |  | 27 |  |  |  | (29 | ) |  |  | 35 |  |  |  | 56 |  |  |  | (35 | ) |  |  | (18 | ) |  |  | 2 |  |  |  | (87 | ) |  |  | 71 |
a | Restated for the adoption of IFRS 15.
b | In 2017, release largely as a result of the impact of the new US transition tax charge.
c | Primarily relates to provisions, accruals, amortisation and share-based payments and contingent purchase consideration.
d | Movements largely reflect the impact of significant US tax reform enacted in 2017.
Summary of Deferred Taxes by Territory | The closing balance is further analysed by key territory as follows:
|  | Property, plant, equipment and software $m |  |  | Other intangible assets $m |  |  | Application fees and contract costs $m |  |  | Deferred gains on loan notes $m |  |  | Deferred gains on investments $m |  |  | Losses $m |  |  | Employee benefits $m |  |  | Undistributed earnings of subsidiaries $m |  |  | Other short-term temporary differences $m |  |  | Total $m |
UK |  |  | (7 | ) |  |  | (4 | ) |  |  | 1 |  |  |  | 0 |  |  |  | 0 |  |  |  | (15 | ) |  |  | (4 | ) |  |  | 0 |  |  |  | (24 | ) |  |  | (53 | )
US |  |  | 127 |  |  |  | 27 |  |  |  | (34 | ) |  |  | 35 |  |  |  | 56 |  |  |  | (16 | ) |  |  | (14 | ) |  |  | 2 |  |  |  | (59 | ) |  |  | 124 |
Other |  |  | 0 |  |  |  | 4 |  |  |  | 4 |  |  |  | 0 |  |  |  | 0 |  |  |  | (4 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (4 | ) |  |  | 0 |
|  |  | 120 |  |  |  | 27 |  |  |  | (29 | ) |  |  | 35 |  |  |  | 56 |  |  |  | (35 | ) |  |  | (18 | ) |  |  | 2 |  |  |  | (87 | ) |  |  | 71 |
Summary of Deferred Tax Balance After Offset of Assets and Liabilities | The analysis of the deferred tax balance after considering the offset of assets and liabilities within entities where there is a legal right to do so is as follows:
|  | 2018 $m |  |  | 2017 Restated $m |
Analysed as: |  |  |  |  |  |  |  |
Deferred tax assets |  |  | (60 | ) |  |  | (75 | )
Deferred tax liabilities |  |  | 131 |  |  |  | 101 |
|  |  | 71 |  |  |  | 26 |
Summary of Unrecognised Deferred Tax Position | The total unrecognised deferred tax position is as follows:
|  | Gross |  |  | Unrecognised deferred tax |
|  | 2018 $m |  |  | 2017 $m |  |  | 2018 $m |  |  | 2017 $m |
Revenue losses |  |  | 448 |  |  |  | 452 |  |  |  | 67 |  |  |  | 76 |
Capital losses |  |  | 516 |  |  |  | 515 |  |  |  | 90 |  |  |  | 99 |
Total losses |  |  | 964 |  |  |  | 967 |  |  |  | 157 |  |  |  | 175 |
Othera |  |  | 25 |  |  |  | 35 |  |  |  | 6 |  |  |  | 9 |
Total |  |  | 989 |  |  |  | 1,002 |  |  |  | 163 |  |  |  | 184 |
a | Primarily relates to costs incurred in prior years for which relief has not been obtained.
Summary of Unrecognized Deferred Tax Based on Expiry Date | There is no expiry date to any of the above unrecognised assets other than for the losses as shown in the table below:
|  | Gross |  |  | Unrecognised deferred tax |
|  | 2018 $m |  |  | 2017 $m |  |  | 2018 $m |  |  | 2017 $m |
Expiry date: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2021 |  |  | 28 |  |  |  | 21 |  |  |  | 6 |  |  |  | 5 |
2022 |  |  | 10 |  |  |  | 11 |  |  |  | 2 |  |  |  | 3 |
2023 |  |  | 1 |  |  |  | 1 |  |  |  | 0 |  |  |  | — |
2024 |  |  | 4 |  |  |  | 20 |  |  |  | 0 |  |  |  | 1 |
2025 |  |  | 92 |  |  |  | 92 |  |  |  | 21 |  |  |  | 23 |
After 2025 |  |  | 46 |  |  |  | 26 |  |  |  | 3 |  |  |  | 3 |

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