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Taxation (Tables) | 12 Months Ended
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Jun. 30, 2023
Income Taxes [Abstract] |
Schedule of analysis of taxation charge for the year | (a) Analysis of taxation charge for the year
| United Kingdom | Rest of world | Total
| 2023 £ million | 2022 £ million | 2021 £ million | 2023 £ million | 2022 £ million | 2021 £ million | 2023 £ million | 2022 £ million | 2021 £ million
Current tax |  |  |  |  |  |  |  |  |
Current year | 160 |  | 174 |  | 100 |  | 879 |  | 867 |  | 684 |  | 1,039 |  | 1,041 |  | 784 |
Adjustments in respect of prior years | 33 |  | 10 |  | 1 |  | (39) |  | 16 |  | 28 |  | (6) |  | 26 |  | 29 |
| 193 |  | 184 |  | 101 |  | 840 |  | 883 |  | 712 |  | 1,033 |  | 1,067 |  | 813 |
Deferred tax |  |  |  |  |  |  |  |  |
Origination and reversal of temporary differences | 25 |  | — |  | 13 |  | (70) |  | 21 |  | 18 |  | (45) |  | 21 |  | 31 |
Changes in tax rates | — |  | 2 |  | 46 |  | 11 |  | 1 |  | 32 |  | 11 |  | 3 |  | 78 |
Adjustments in respect of prior years | 6 |  | — |  | 8 |  | (35) |  | (42) |  | (23) |  | (29) |  | (42) |  | (15) |
| 31 |  | 2 |  | 67 |  | (94) |  | (20) |  | 27 |  | (63) |  | (18) |  | 94 |
Taxation on profit | 224 |  | 186 |  | 168 |  | 746 |  | 863 |  | 739 |  | 970 |  | 1,049 |  | 907 |
Schedule of exceptional tax (credits)/charges | (b) Exceptional tax (credits)/charges The taxation charge includes the following exceptional items:
| 2023 £ million | 2022 £ million | 2021 £ million
Brand impairment(1) | (124) |  | (55) |  | — |
US guarantee fee claim(2) | (57) |  | — |  | — |
Supply chain agility programme | (23) |  | — |  | — |
Distribution termination fee | (11) |  | — |  | — |
Disposal of businesses and brands(3) | 29 |  | 23 |  | — |
Winding down Russian operations | — |  | 3 |  | — |
Tax rate change in the United Kingdom(4) | — |  | — |  | 46 |
Tax rate change in the Netherlands(5) | — |  | — |  | 42 |
Other items | — |  | (2) |  | (4) |
| (186) |  | (31) |  | 84 |
(1) In the year ended 30 June 2023, an exceptional tax credit of £124 million was recognised mainly in respect of the impairment of the McDowell's brand. In the year ended 30 June 2022, the exceptional tax credit of £55 million consists of tax impact on the impairment of the McDowell's and Bell's brands for £35 million and £20 million, respectively. (2) In the year ended 30 June 2023, an exceptional tax credit of £57 million was recognised in respect of the deductibility of fees paid to Diageo plc for guaranteeing externally issued debt of US group entities. Following engagement with the tax authorities, guarantee fees for the periods ended 30 June 2012 to 30 June 2022 are fully deductible. (3) In the year ended 30 June 2023, the exceptional net tax charge of £29 million mainly comprised of a tax charge of £42 million in respect of the sale of Guinness Cameroun S.A., partly offset by a tax credit of £10 million in respect of the sale of certain USL businesses. In the year ended 30 June 2022, a £23 million exceptional tax charge was recognised in respect of the gain on the sale of the Picon brand. (4) On 24 May 2021, legislation was substantively enacted in the UK to increase the corporate tax rate to 25% with effect from 1 April 2023. As a result of the change, an exceptional tax charge of £46 million was recognised for the year ended 30 June 2021 in relation to the remeasurement of deferred tax assets and liabilities. In addition, there was a one-off charge of £48 million to other comprehensive income and equity, mainly in respect of the remeasurement of the deferred tax liabilities on the post employment assets. (5) On 15 December 2020, legislation was substantively enacted in the Netherlands to maintain the headline corporate tax rate at 25%, reversing a previously enacted reduction in the corporate tax rate to 21.7% from 2021. As a result of the change, an exceptional tax charge of £42 million was recognised for the year ended 30 June 2021 in relation to the remeasurement of deferred tax liabilities. In the year ended 30 June 2022, the Dutch Senate enacted an increased tax rate of 25.8%. The remeasurement of deferred tax liabilities was recognised as an underlying tax charge.
Schedule of taxation rate reconciliation and factors that may affect future tax charges | (c) Taxation rate reconciliation and factors that may affect future tax charges
| 2023 £ million | 2023 % | 2022 £ million | 2022 % | 2021 £ million | 2021 %
Profit before taxation | 4,736 |  |  | 4,387 |  |  | 3,706 |  |
Notional charge at UK corporation tax rate | 971 |  | 20.5 |  | 833 |  | 19.0 |  | 704 |  | 19.0 |
Elimination of notional tax on share of after tax results of associates and joint ventures | (76) |  | (1.6) |  | (79) |  | (1.8) |  | (63) |  | (1.7) |
Differences in overseas tax rates | 95 |  | 2.0 |  | 161 |  | 3.7 |  | 128 |  | 3.5 |
Disposal of businesses and brands | (42) |  | (0.9) |  | 21 |  | 0.5 |  | (2) |  | (0.1) |
Other items not chargeable | (63) |  | (1.3) |  | (49) |  | (1.1) |  | (52) |  | (1.4) |
Impairment | (2) |  | — |  | 36 |  | 0.8 |  | — |  | — |
Other items not deductible | 71 |  | 1.5 |  | 58 |  | 1.3 |  | 67 |  | 1.8 |
Irrecoverable withholding taxes | 38 |  | 0.8 |  | 39 |  | 0.9 |  | 25 |  | 0.7 |
Movement in provision in respect of uncertain tax positions(1) | 27 |  | 0.6 |  | 42 |  | 0.9 |  | 1 |  | — |
Changes in tax rates(2) | 11 |  | 0.2 |  | 3 |  | 0.1 |  | 78 |  | 2.1 |
Adjustments in respect of prior years(3) | (60) |  | (1.3) |  | (16) |  | (0.4) |  | 21 |  | 0.6 |
Taxation on profit | 970 |  | 20.5 |  | 1,049 |  | 23.9 |  | 907 |  | 24.5 |
Tax rate before exceptional items | — |  | 23.0 |  | — |  | 22.5 |  | — |  | 22.2 |
(1) Movement in provision in respect of uncertain tax positions includes both current and prior year uncertain tax position movements. (2) Changes in tax rates for the year ended 30 June 2021 are mainly due to the tax rate change in the Netherlands and the United Kingdom. (3) Excludes prior year movement in provisions. Also included an exceptional tax credit of £57 million in respect of the deductibility of fees paid to Diageo plc for guaranteeing externally issued debt of its US group entities.
Schedule of deferred tax assets and liabilities | (d) Deferred tax assets and liabilities Deferred tax recognised in the consolidated balance sheet comprise the following net deferred tax (liabilities)/assets:
| Property, plant and equipment £ million | Intangible assets £ million | Post employment plans £ million | Tax losses £ million | Other temporary differences(1) £ million | Total £ million
At 30 June 2021 | (381) |  | (1,636) |  | (129) |  | 57 |  | 244 |  | (1,845) |
Exchange differences | (21) |  | (155) |  | 3 |  | 3 |  | 17 |  | (153) |
Recognised in income statement | (42) |  | (3) |  | (10) |  | 2 |  | 74 |  | 21 |
Reclassification | 2 |  | 40 |  | — |  | — |  | (7) |  | 35 |
Recognised in other comprehensive loss and equity | (20) |  | (104) |  | (103) |  | — |  | 20 |  | (207) |
Tax rate change – recognised in income statement | (1) |  | (3) |  | — |  | 1 |  | — |  | (3) |
Tax rate change – recognised in other comprehensive loss and equity | — |  | — |  | (22) |  | — |  | 2 |  | (20) |
Acquisition of subsidiaries | — |  | (31) |  | — |  | — |  | — |  | (31) |
Sale of businesses | (5) |  | — |  | — |  | — |  | 3 |  | (2) |
At 30 June 2022 | (468) |  | (1,892) |  | (261) |  | 63 |  | 353 |  | (2,205) |
Exchange differences | 33 |  | 113 |  | (3) |  | 1 |  | (10) |  | 134 |
Recognised in income statement | (30) |  | 93 |  | 2 |  | (15) |  | 24 |  | 74 |
Recognised in other comprehensive income and equity | (6) |  | (30) |  | 152 |  | — |  | (50) |  | 66 |
Tax rate change – recognised in income statement | (1) |  | (12) |  | (1) |  | — |  | 3 |  | (11) |
Acquisition of subsidiaries | — |  | (71) |  | — |  | — |  | — |  | (71) |
Transfer from asset held for sale | (2) |  | (37) |  | — |  | — |  | 5 |  | (34) |
Sale of businesses | 10 |  | — |  | (1) |  | — |  | (4) |  | 5 |
At 30 June 2023 | (464) |  | (1,836) |  | (112) |  | 49 |  | 321 |  | (2,042) |
(1) Deferred tax on other temporary differences includes hyperinflation, fair value movement on cross-currency swaps, interest and finance costs, share-based payments and intra-group sales of products.
Schedule of net deferred assets and liabilities | After offsetting deferred tax assets and liabilities that relate to taxes levied by the same taxation authority on the same taxable fiscal unit, the net deferred tax liability comprises:
| 2023 £ million | 2022 £ million
Deferred tax assets | 141 |  | 114 |
Deferred tax liabilities | (2,183) |  | (2,319) |
| (2,042) |  | (2,205) |
Schedule of unrecognized deferred tax assets and liabilities | (e) Unrecognised deferred tax assets The following table shows the tax value of tax losses which has not been recognised due to uncertainty over their utilisation in future periods. The gross value of those losses is £632 million (2022 – £674 million).
| 2023 £ million | 2022 £ million
Capital losses – indefinite | 98 |  | 98 |
Trading losses – indefinite | 24 |  | 25 |
Trading and capital losses – expiry dates up to 2032 | 39 |  | 46 |
| 161 |  | 169 |

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