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Tax (Tables) | 12 Months Ended
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Dec. 31, 2019
Text block [abstract] |
Summary of Tax on Profit | Tax on profit
|  | 2019 $m |  |  | 2018 Restated $m |  |  | 2017 Restated $m |
Income tax |  |  |  |  |  |  |  |  |  |  |  |
UK corporation tax at 19.00% (2018: 19.00%, 2017: 19.25%): |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 5 |  |  |  | 10 |  |  |  | 10 |
Adjustments in respect of prior periods |  |  | 13 |  |  |  | 4 |  |  |  | (2 | )
|  |  | 18 |  |  |  | 14 |  |  |  | 8 |
Foreign tax: |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 154 |  |  |  | 95 |  |  |  | 210 |
Benefit of tax reliefs on which no deferred tax previously recognised |  |  | (2 | ) |  |  | (1 | ) |  |  | (13 | )
Adjustments in respect of prior periods |  |  | (11 | ) |  |  | (13 | ) |  |  | 2 |
|  |  | 141 |  |  |  | 81 |  |  |  | 199 |
Total current tax |  |  | 159 |  |  |  | 95 |  |  |  | 207 |
Deferred tax: |  |  |  |  |  |  |  |  |  |  |  |
Origination and reversal of temporary differences |  |  | 11 |  |  |  | 39 |  |  |  | (8 | )
Changes in tax rates and tax laws a |  |  | 2 |  |  |  | 1 |  |  |  | (56 | )
Adjustments to estimated recoverable deferred tax assets b |  |  | (2 | ) |  |  | (2 | ) |  |  | (9 | )
Adjustments in respect of prior periods |  |  | (14 | ) |  |  | (1 | ) |  |  | (16 | )
Total deferred tax |  |  | (3 | ) |  |  | 37 |  |  |  | (89 | )
Total income tax charge for the year |  |  | 156 |  |  |  | 132 |  |  |  | 118 |
Further analysed as tax relating to: |  |  |  |  |  |  |  |  |  |  |  |
Profit before exceptional items c |  |  | 176 |  |  |  | 159 |  |  |  | 203 |
Exceptional items: |  |  |  |  |  |  |  |  |  |  |  |
Tax on exceptional items (note [6]) |  |  | (20 | ) |  |  | (22 | ) |  |  | 2 |
Exceptional tax (note [6]) |  |  | — |  |  |  | (5 | ) |  |  | (87 | )
|  |  | 156 |  |  |  | 132 |  |  |  | 118 |
a | In 2017, predominantly reflects a change in US tax rates following significant US tax reforms.
b | Represents a re-assessment of the recovery of recognised and off-balance sheet deferred tax assets in line with the Group’s profit forecasts.
c | Includes $113m (2018: $93m, 2017: $157m) in respect of US taxes.
Summary of Reconciliation of Tax Charge Including Gain on Disposal of Assets |
|  | Total a |  |  | Before exceptional items and System Fund b |
|  | 2019 % |  |  | 2018 Restated % |  |  | 2017 Restated % |  |  | 2019 % |  |  | 2018 Restated % |  |  | 2017 Restated % |
Reconciliation of tax charge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
UK corporation tax at standard rate |  |  | 19.0 |  |  |  | 19.0 |  |  |  | 19.3 |  |  |  | 19.0 |  |  |  | 19.0 |  |  |  | 19.3 |
Tax credits |  |  | (0.8 | ) |  |  | (0.5 | ) |  |  | (0.5 | ) |  |  | (0.6 | ) |  |  | (0.3 | ) |  |  | (0.5 | )
System Fund c |  |  | 1.1 |  |  |  | 5.0 |  |  |  | 0.9 |  |  |  | (0.5 | ) |  |  | (0.5 | ) |  |  | (0.4 | )
Impairments |  |  | 1.7 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other permanent differences |  |  | 1.3 |  |  |  | 0.6 |  |  |  | 0.8 |  |  |  | 0.8 |  |  |  | 0.3 |  |  |  | 0.6 |
Non-recoverable foreign taxes d |  |  | 3.2 |  |  |  | 0.7 |  |  |  | 0.3 |  |  |  | 2.4 |  |  |  | 0.5 |  |  |  | 0.3 |
Net effect of different rates of tax in overseas businesses e |  |  | 6.7 |  |  |  | 4.6 |  |  |  | 14.6 |  |  |  | 5.5 |  |  |  | 3.7 |  |  |  | 13.9 |
Effects of changes in tax rates resulting from significant US tax reform |  |  | — |  |  |  | — |  |  |  | (8.7 | ) |  |  | — |  |  |  | — |  |  |  | — |
Release of provision for taxation on unremitted earnings following significant US tax reform |  |  | — |  |  |  | — |  |  |  | (7.8 | ) |  |  | — |  |  |  | — |  |  |  | — |
Transition tax liability arising from significant US tax reform |  |  | — |  |  |  | — |  |  |  | 4.8 |  |  |  | — |  |  |  | — |  |  |  | — |
Effect of other changes in tax rates and tax laws |  |  | (0.4 | ) |  |  | 0.3 |  |  |  | 0.3 |  |  |  | (0.3 | ) |  |  | 0.2 |  |  |  | 0.3 |
Benefit of tax reliefs on which no deferred tax previously recognised |  |  | (0.4 | ) |  |  | (0.4 | ) |  |  | (1.9 | ) |  |  | (0.3 | ) |  |  | (0.3 | ) |  |  | (1.8 | )
Effect of adjustments to estimated recoverable deferred tax assets |  |  | (0.4 | ) |  |  | 0.1 |  |  |  | (1.4 | ) |  |  | (0.3 | ) |  |  | 0.1 |  |  |  | (1.3 | )
Adjustment to tax charge in respect of prior periods |  |  | (2.2 | ) |  |  | (2.0 | ) |  |  | (2.6 | ) |  |  | (1.9 | ) |  |  | (1.0 | ) |  |  | (1.1 | )
a |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 28.8 |  |  |  | 27.4 |  |  |  | 18.1 |  |  |  | 23.8 |  |  |  | 21.7 |  |  |  | 29.3 |
a | Calculated in relation to total profits including exceptional items and System Fun d .
b | Calculated in relation to profits excluding exceptional items and System Fund earnings.
c | The System Fund is , in general, not subject to taxation.
d | In 2018, IHG recognised a benefit in respect of foreign tax credits in the US that were carried back against 2017 tax. In 2019, this carry back benefit is not available which has led to an increase in irrecoverable tax by 1.8 percentage points on to the underlying rate before exceptional items and System Fund. These credits are disclosed within unrecognised deferred tax.
e | Before exceptional items and System Fund includes 4.9 p ercentage p oints (2018: 4.2 percentage points , 2017: 13.3 percentage points) driven by the relatively high US federal tax rate.
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:
|  | 2019 |  |  | 2018 Restated |  |  | 2017 Restated |
|  | Profit $m |  |  | Tax $m |  |  | Rate % |  |  | Profit $m |  |  | Tax $m |  |  | Rate % |  |  | Profit $m |  |  | Tax $m |  |  | Rate % |
Group income statement |  |  | 542 |  |  |  | 156 |  |  |  | 28.8 |  |  |  | 482 |  |  |  | 132 |  |  |  | 27.4 |  |  |  | 653 |  |  |  | 118 |  |  |  | 18.1 |
Adjust for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exceptional items and tax (note [6]) |  |  | 148 |  |  |  | 20 |  |  |  |  |  |  |  | 104 |  |  |  | 27 |  |  |  |  |  |  |  | (4 | ) |  |  | 85 |  |  |  |  |
System Fund |  |  | 49 |  |  |  | — |  |  |  |  |  |  |  | 146 |  |  |  | — |  |  |  |  |  |  |  | 34 |  |  |  | — |  |  |  |  |
Other |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | (3 | ) |  |  |  |
|  |  | 739 |  |  |  | 176 |  |  |  | 23.8 |  |  |  | 732 |  |  |  | 159 |  |  |  | 21.7 |  |  |  | 683 |  |  |  | 200 |  |  |  | 29.3 |
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 Group income statement is as follows:
|  | 2019 $m |  |  | 2018 $m |  |  | 2017 $m |
Current tax charge in the Group income statement |  |  | (159 | ) |  |  | (95 | ) |  |  | (207 | )
Current tax credit in the Group statement of comprehensive income |  |  | 2 |  |  |  | 1 |  |  |  | — |
Current tax credit taken directly to equity |  |  | 4 |  |  |  | 8 |  |  |  | 12 |
Total current tax charge |  |  | (153 | ) |  |  | (86 | ) |  |  | (195 | )
Movements to tax contingencies within the Group income statement a |  |  | 3 |  |  |  | (4 | ) |  |  | (3 | )
Timing differences of cash tax paid and foreign exchange differences |  |  | 9 |  |  |  | 22 |  |  |  | 26 |
Tax paid per cash flow |  |  | (141 | ) |  |  | (68 | ) |  |  | (172 | )
a | Tax contingency movements are included within the current tax charge but do not impact cash tax paid in the year.
Summary of Deferred Tax | Deferred tax
|  | Property, plant, equipment and software $m |  |  | Other intangible assets and contract assets Restated $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 a Restated $m |  |  | Total Restated $m |
At 1 January 2018 |  |  | (98 | ) |  |  | (2 | ) |  |  | 25 |  |  |  | (34 | ) |  |  | (54 | ) |  |  | 40 |  |  |  | 20 |  |  |  | — |  |  |  | 86 |  |  |  | (17 | )
Group income statement |  |  | (26 | ) |  |  | (8 | ) |  |  | 4 |  |  |  | (1 | ) |  |  | (2 | ) |  |  | (4 | ) |  |  | — |  |  |  | (2 | ) |  |  | 2 |  |  |  | (37 | )
Assets of businesses acquired |  |  | 4 |  |  |  | (11 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 3 |
Group statement of comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | (2 | ) |  |  | (4 | )
Group statement of changes in equity |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5 | ) |  |  | (5 | )
Exchange and other adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
At 31 December 2018 |  |  | (120 | ) |  |  | (21 | ) |  |  | 29 |  |  |  | (35 | ) |  |  | (56 | ) |  |  | 35 |  |  |  | 18 |  |  |  | (2 | ) |  |  | 91 |  |  |  | (61 | )
Group income statement |  |  | — |  |  |  | 1 |  |  |  | (2 | ) |  |  | 1 |  |  |  | (2 | ) |  |  | (9 | ) |  |  | — |  |  |  | 2 |  |  |  | 12 |  |  |  | 3 |
Assets of businesses acquired |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 2 |
Group statement of comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | (1 | ) |  |  | — |
Exchange and other adjustments |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 4 |
At 31 December 2019 |  |  | (119 | ) |  |  | (19 | ) |  |  | 27 |  |  |  | (34 | ) |  |  | (58 | ) |  |  | 27 |  |  |  | 20 |  |  |  | — |  |  |  | 104 |  |  |  | (52 | )
a | Primarily relates to provisions, accruals, share-based payments, right-of-use assets, lease liabilities and contingent purchase consideration.
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 and contract 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 |  |  | 6 |  |  |  | 5 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | 21 |  |  |  | 4 |  |  |  | — |  |  |  | 20 |  |  |  | 55 |
US |  |  | (125 | ) |  |  | (18 | ) |  |  | 33 |  |  |  | (34 | ) |  |  | (58 | ) |  |  | 1 |  |  |  | 16 |  |  |  | — |  |  |  | 74 |  |  |  | (111 | )
Other |  |  | — |  |  |  | (6 | ) |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 4 |
|  |  | (119 | ) |  |  | (19 | ) |  |  | 27 |  |  |  | (34 | ) |  |  | (58 | ) |  |  | 27 |  |  |  | 20 |  |  |  | — |  |  |  | 104 |  |  |  | (52 | )
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:
|  | 2019 $m |  |  | 2018 Restated $m |
Analysed as: |  |  |  |  |  |  |  |
Deferred tax assets |  |  | 66 |  |  |  | 63 |
Deferred tax liabilities |  |  | (118 | ) |  |  | (124 | )
|  |  | (52 | ) |  |  | (61 | )
Summary of Unrecognised Deferred Tax Position | The total unrecognised deferred tax position is as follows:
|  | Gross |  |  | Unrecognised deferred tax |
|  | 2019 $m |  |  | 2018 Restated $m |  |  | 2019 $m |  |  | 2018 Restated $m |
Revenue losses |  |  | 413 |  |  |  | 448 |  |  |  | 65 |  |  |  | 67 |
Capital losses |  |  | 541 |  |  |  | 516 |  |  |  | 95 |  |  |  | 90 |
Total losses |  |  | 954 |  |  |  | 964 |  |  |  | 160 |  |  |  | 157 |
Foreign tax credits |  |  | 13 |  |  |  | — |  |  |  | 13 |  |  |  | — |
Leases |  |  | 25 |  |  |  | 25 |  |  |  | 7 |  |  |  | 7 |
Other a |  |  | 2 |  |  |  | 24 |  |  |  | 1 |  |  |  | 7 |
|  |  | 994 |  |  |  | 1,013 |  |  |  | 181 |  |  |  | 171 |
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 and foreign tax credits as shown in the table below:
|  | Gross |  |  | Unrecognised deferred tax |
|  | 2019 $m |  |  | 2018 $m |  |  | 2019 $m |  |  | 2018 $m |
Expiry date: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2020 |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |
2021 |  |  | 31 |  |  |  | 28 |  |  |  | 6 |  |  |  | 6 |
2022 |  |  | 10 |  |  |  | 10 |  |  |  | 2 |  |  |  | 2 |
2023 |  |  | 2 |  |  |  | 1 |  |  |  | — |  |  |  | — |
2024 |  |  | 4 |  |  |  | 4 |  |  |  | 1 |  |  |  | — |
2025 |  |  | 91 |  |  |  | 92 |  |  |  | 20 |  |  |  | 21 |
After 2025 |  |  | 24 |  |  |  | 46 |  |  |  | 17 |  |  |  | 3 |

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