Windfall for Balfour Beatty
By Thomas Allen23 January 2018
UK-based infrastructure firm Balfour Beatty expects to net £20 million (US$27.9 million) as a result of the Tax Cuts and Jobs Act recently passed by the US government.
This tax cut was particularly welcomed since the company took a hit when its joint venture partner Carillion went into compulsory liquidation earlier in January.
Although the tax reforms are still subject to further guidance and interpretation from US authorities, the reduction in federal corporate income tax rates from 35% to 21% is expected to reduce the effective tax rate on Balfour Beatty’s US earnings from about 40% to around 26% in 2018 and beyond.
Also, as a result of this reduced tax rate on US assets, the directors’ valuation of the company’s investments portfolio will increase by approximately £95 million (US$132.5 million).
Balfour Beatty expects that its 2017 earnings will benefit from a non-underlying one-off non-cash credit from the revaluation of US deferred tax liabilities. Based on the net deferred tax liabilities at the end of 2016, it has been estimated that this credit will be approximately £20 million (US$27.9 million).
Further information will be included in the firm’s 2017 full-year financial results in March.