Smith & Nephew expects lower tax rate from 2018 on US reforms

Medical technology group Smith & Nephew said on Tuesday that changes to the US tax system should reduce its corporate tax rate from 2018 by four to five percentage points.

The company expects the changes - which see corporate tax cut to 21% from 35% - to reduce its tax rate from this year to between 20% and 21% from previous guidance of around 25%.

For 2017, the one-time effects of the US tax reform, including the revaluation of certain deferred tax balances, are not expected to be material and will be taken outside trading results. S&N also said it now expects the full-year tax rate on 2017 trading results to be lower than its previous guidance of around 22%.

"This is mainly due to the release of provisions, which are one-off in nature, as we conclude and revise open tax issues, including the US tax audit as reported at the half year."

The final tax rate will be disclosed in the company's results for the year ended 31 December 2017, due to be released on 8 February.

At 1300 GMT, the shares were up 2.3% to 1,264.50p.