Interest & tax

Interest

As discussed above, net interest has decreased by £30 million in the year. The breakdown is as follows:

Taxation

The effective rate of tax, calculated on profit before exceptional items, prior year tax adjustments and the impact of rate changes is 29% (2009/10: 30%). The overall rate is 27% (2009/10: 32%).

The Group's effective tax rate is sensitive to the blend of tax rates and profits in the various jurisdictions. Whilst we continue to plan our tax affairs efficiently and adopt a prudent approach towards providing for uncertain tax positions, we are aware that with pressure on government finances, the tax cost of multinationals may increase over time.

The tax rates for this financial year and the expected rates for next year are as follows:

Taxation risk management

The Group's tax strategy is to manage its tax affairs efficiently and in a way which enhances shareholder value whilst balancing the tax risk it faces. Tax risks can arise from change in law, differences in interpretation of law, changes in tax rates and the failure to comply with the tax law and associated procedures. The Group manages and controls these risks through local management, its Group tax department and appropriate advice from reputable professional firms. Where disputes arise with the tax authorities the Group addresses the areas of dispute promptly in a professional, open and constructive manner.

Exceptional items

The Group has recorded a net exceptional post-tax charge of £3 million in the year (2009/10: gain of £10 million) as follows: