2020
£m		2019
£m
Interest payable
Interest payable on borrowings held at amortised cost(1)231.7232.0
231.7232.0
Fair value losses/(gains) on debt and derivative instruments
Fair value hedge relationships:
Borrowings(2)87.147.4
Designated swaps(2)(3)(68.6)(29.7)
18.517.7
Financial instruments at fair value through profit or loss:
Borrowings designated at fair value through profit or loss(4)57.832.8
Associated swaps(49.8)(37.1)
8.0(4.3)
Fixed interest rate swaps(5)52.319.1
Net receipts on derivatives and debt under fair value option(15.3)(40.6)
Inflation swaps(5)13.4–
Other(0.6)(1.4)
49.8(22.9)
Net fair value losses/(gains) on debt and derivative instruments(6)76.3(9.5)
308.0222.5
Notes:
  1. Includes a £100.8 million (2019: £98.3 million) non-cash inflation expense repayable on maturity in relation to the group’s index-linked debt and £1.6 million (2019: £nil) interest expense on lease liabilities, representing the unwinding of the discounting applied to future lease payments.
  2. Includes foreign exchange losses of £14.8 million (2019: £37.6 million gains). These losses/gains are largely offset by fair value gains/losses on derivatives.
  3. Under the provisions of IFRS 9 ‘Financial instruments’, a £1.3 million fair value gain resulting from changes to the foreign currency basis spread (2019: £2.2 million loss) has been recognised in other comprehensive income rather than profit or loss as they relate to items designated in an accounting hedge relationship.
  4. Under the provisions of IFRS 9 ‘Financial instruments’, a £34.2 million fair value gain resulting from changes in the group’s own credit risk (2019: £6.6 million gain) has been recognised in other comprehensive income rather than profit or loss.
  5. These swap contracts are not designated within an IFRS 9 hedge relationship and are classed as ’held for trading’ under the accounting standard. These derivatives form economic hedges and, as such, management intends to hold these through to maturity.
  6. Includes £16.0 million income (2019: £30.6 million) due to net interest on derivatives and debt under fair value option and £0.5 million income (2019: £nil) due to non-cash inflation uplift on index-linked derivatives.


Interest payable is stated net of £40.6 million (2019: £37.4 million) borrowing costs capitalised in the cost of qualifying assets within property, plant and equipment and intangible assets during the year. This has been calculated by applying a capitalisation rate of 3.2 per cent (2019: 3.1 per cent) to expenditure on such assets as prescribed by IAS 23 ‘Borrowing Costs’.

In addition to the £308.0 million finance expense, a £5.0 million allowance for expected credit losses was recognised during the year (2019: £nil) in respect of loans to the group's joint venture, Water Plus (see note A6 for further details).