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Deferred tax

12 Months Ended

Jun. 30, 2023

17	Deferred tax

Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after allowable offset):


	2023	2022
	£’000	£’000
UK deferred tax liabilities	3,304	7,402
At 30 June	3,304	7,402

The movement in deferred tax assets and deferred tax liabilities during the year is as follows:


	2023	2022
	£’000	£’000
At 1 July	7,402	35,546
Credited to statement of profit or loss (Note 10)	(4,801)	(29,431)
Expensed to other comprehensive income (Note 10)	1,018	1,287
Credit relating to share-based payments⁽¹⁾	(315)	—
At 30 June	3,304	7,402

17	Deferred tax (continued)

The movement in US net deferred tax assets are as follows:


		Unrealized
	Net	foreign
	operating	exchange
	losses and	and	Property,
	interest	derivative	plant and
	restriction	movements	equipment	Total⁽²⁾
	£’000	£’000	£’000	£’000
At 1 July 2021	(3,359)	—	3,359	—
Expensed/(credited) to statement of profit or loss (Note 10)	(4,492)	4,575	(83)	—
At 30 June 2022	(7,851)	4,575	3,276	—
Expensed/(credited) to statement of profit or loss (Note 10)	875	(1,779)	904	—
At 30 June 2023	(6,976)	2,796	4,180	—

(1)	Credits relating to share-based payments arise on the movement in the share price on equity-settled awards between the grant date and the reporting date – see consolidated statement of changes in equity above.

(2)

The deferred tax assets were written down in the year ended 30 June 2021 to the extent that they will not shelter profits arising from the unwinding of the deferred tax liability. This is due to the change in the substantively enacted UK Corporation tax rate from 19% to 25%, effective April 2023. The current US federal corporate income tax rate is 21%. As a result of this change the US deferred tax asset is no longer forecast to give rise to a future economic benefit. It is expected that any future US tax payable will be sheltered by future foreign tax credits arising from UK tax payable. Future increases in the US federal corporate income tax rate could result in a reversal of the US deferred tax asset write down.

The movement in UK net deferred tax liabilities are as follows:


	Accelerated		Non	Property	Net
	tax		qualifying	fair value	operating
	depreciation	Intangibles	property	adjustment	losses	Other⁽¹⁾	Total⁽²⁾
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 July 2021	609	15,000	17,482	17,442	(12,180)	(2,807)	35,546
(Credited)/expensed to statement of profit or loss (Note 10)	(229)	1,359	(5)	(631)	(32,427)	2,502	(29,431)
Expensed to other comprehensive income (Note 10)	—	—	—	—	40	1,247	1,287
At 30 June 2022	380	16,359	17,477	16,811	(44,567)	942	7,402
Expensed/(credited) to statement of profit or loss (Note 10)	1,222	(622)	(5)	(631)	(2,290)	(2,475)	(4,801)
Expensed to other comprehensive income (Note 10)	—	—	—	—	349	669	1,018
Credit relating to share based payments	—	—	—	—	—	(315)	(315)
At 30 June 2023	1,602	15,737	17,472	16,180	(46,508)	(1,179)	3,304

(1)	The “Other” deferred tax asset balance primarily comprises foreign exchange differences; fair value movements recognized in the hedging reserve; pensions not paid in the year and salaries not paid before 31 March 2024.

(2)	Of the total deferred tax liability, £3,304,000 is expected to be settled after more than one year.

17Deferred tax (continued)

Significant estimates - recognition of deferred tax assets

Deferred tax assets are recognized only to the extent that it is probable that the associated deductions will be available for use against future profits and that there will be sufficient future taxable profit available against which the temporary differences can be utilized, provided the asset can be reliably quantified. In estimating future taxable profit, management uses “base case” approved forecasts which incorporate a number of assumptions, including a prudent level of future uncontracted revenue in the forecast period. In arriving at a judgment in relation to the recognition of deferred tax assets, management considers the regulations applicable to tax and advice on their interpretation and potential future business planning. Future taxable income may be higher or lower than estimates made when determining whether it is appropriate to record a tax asset and the amount to be recorded. Furthermore, changes in the legislative framework or applicable tax case law may result in management reassessing the recognition of deferred tax assets in future periods.

At 30 June 2023 there is an unrecognized US deferred tax asset of £90,548,000 which is detailed below (2022: £87,609,000 in respect of foreign tax credits in the US):

General

Net operating

Accruals not

Salary not

losses and

paid within 8.5

paid with

Foreign

interest

months of

2.5 months

Intangible

tax credits

restriction

year end

of year end

assets

Other

Total

£’000

Unrecognized US deferred tax asset

20,553

56,071

3,488

4,089

3,112

3,235

90,548

At 30 June 2023, the Group had no unrecognized UK deferred tax assets (2022: £nil).