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Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12 — Income Taxes

 

The components of our provision for income taxes for the years ended December 31, 2024, 2023 and 2022, are as follows (in millions):

 ​

​

 

Year ended December 31,

 

​

 

2024

  

2023

  

2022

 

Current income taxes:

 

​

  

​

  

​

 

UK

 $14.3  $15.2  $10.5 

U.S., including state and local

  143.2   88.1   95.9 

International

  6.4   3.0   8.8 

Total current income taxes

  163.9   106.3   115.2 

Deferred income taxes:

 

​

  

​

  

​

 

UK

  2.2   (4.0)  (10.3)

U.S., including state and local

  1.0   (2.0)  10.0 

International

  (0.8)  —   (14.0)

Total deferred income benefits

  2.4   (6.0)  (14.3)

Total income tax expense

 $166.3  $100.3  $100.9 

 

The components of our total income before taxes for the years ended December 31, 2024, 2023 and 2022, are as follows (in millions):

 ​

​

 

Year ended December 31,

 

​

 

2024

  

2023

  

2022

 

UK

 $57.4  $86.4  $(44.1)

U.S.

  595.6   423.4   428.7 

International

  (41.1)  17.2   (9.2)

Total income before taxes

 $611.9  $527.0  $375.4 

 

We are a tax resident in the UK and a reconciliation is required from the UK statutory rate to the effective tax rate. The following is a reconciliation between the UK statutory corporation tax rate and the effective tax rate on our income from operations for the years ended December 31, 2024, 2023 and 2022:

 ​

​

 

Year ended December 31,

 

​

 

2024

  

2023

  

2022

 

UK statutory corporation tax rate

  25.0%  23.5%  19.0%

Effect of foreign tax rates

  (1.7)  0.1   6.3 

Equity-based compensation

  0.4   0.3   0.7 

Tax adjustments

  0.9   0.5   2.0 

Impact of changes in statutory tax rates on deferred taxes

  —   (1.9)  (1.3)

Foreign currency translation reserves reclassification

  5.6   1.6   (0.3)

Taxes applicable to prior years

  (1.2)  (1.9)  (4.5)

Other, net

  (1.7)  (3.4)  0.3 

Effective income tax rate, controlling interest

  27.3%  18.8%  22.2%

Net loss (income) attributable to noncontrolling interests

  (0.1)  0.2   4.7 

Total effective income tax rate

  27.2%  19.0%  26.9%

 

We operate in several tax jurisdictions around the world, each with its own statutory tax rate and set of tax laws and regulations. As a result, our future blended average statutory tax rate will be influenced by any changes to such laws and regulations and the mix of profits and losses of our subsidiaries.

 

Tax Legislation

 ​

Any legislative changes and new or proposed tax regulations may result in additional income tax impacts, which could be material in the period any such changes are enacted.

 ​

Deferred Taxes

 ​

The significant components of our deferred tax assets and liabilities as of December 31, 2024 and 2023, are as follows (in millions):

 ​

​

 

December 31,

 

​

 

2024

  

2023

 

Deferred tax assets:

 

​

  

​

 

Compensation and staff benefits

 $64.5  $59.8 

Loss carryforwards(1)

  127.6   88.4 

Accrued liabilities

  8.0   7.0 

Lease liabilities

  18.7   16.8 

Other

  (2.1)  5.3 

Gross deferred tax assets

  216.7   177.3 

Valuation allowance

  (119.4)  (76.8)

Deferred tax assets, net of valuation allowance

 $97.3  $100.5 

Deferred tax liabilities:

 

​

  

​

 

Retirement benefits

 $(17.4) $(21.4)

Goodwill and acquired intangible assets

  (628.9)  (628.6)

Lease ROU assets

  (18.0)  (16.2)

Other

  (1.3)  (3.5)

Gross deferred tax liabilities

  (665.6)  (669.7)

Total deferred tax liabilities(2)

 $(568.3) $(569.2)

 

(1)

The majority of the 2024 loss carryforward relates to the UK capital loss of $283.4 million and U.S. capital loss of $164.0 million, before tax effects. The capital loss in the UK can be carried forward indefinitely, while the capital loss in the U.S. will begin to expire in 2029. There is a full valuation allowance against UK capital losses and a valuation allowance of $37.0 million after tax effects against U.S. capital losses.

(2)

The change in the net deferred tax liabilities does not equal the deferred tax expense due to the foreign currency translation adjustment on deferred tax liabilities booked through equity.

 ​

Deferred tax assets and liabilities that relate to the same jurisdiction are recorded net on our Consolidated Balance Sheets as non-current balances and as of December 31, 2024 and 2023, are as follows (in millions):

 ​

​

 

December 31,

 

​

 

2024

  

2023

 

Deferred tax assets, net (included in other non-current assets)

 $1.0  $1.6 

Deferred tax liabilities, net

  (569.3)  (570.8)

Total deferred tax liabilities

 $(568.3) $(569.2)

 ​

A valuation allowance has been established against the deferred tax assets related to our tax loss carryforward where a history of losses in the respective tax jurisdiction makes it unlikely that the deferred tax asset will be realized or where it is unlikely that we would generate sufficient taxable income of the appropriate character to realize the full benefit of the deferred tax asset. The valuation allowance for deferred tax assets increased by $42.6 million in 2024. The increase is primarily attributable to allowance on capital losses during the current year.

 

Unrecognized Tax Benefits

 ​

We operate in several tax jurisdictions and a number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is finally resolved. A reconciliation of the beginning and ending liability for the years ended December 31, 2024, 2023 and 2022, is as follows (in millions):

 

​

 

Year ended December 31,

 

​

 

2024

  

2023

  

2022

 

Beginning balance

 $28.4  $26.7  $19.2 

Additions for tax positions of current year

  5.7   6.9   9.7 

Reduction due to settlement with taxing authorities

  (0.8)  (0.3)  (1.4)

Reduction due to statute expirations

  (4.3)  (4.6)  (0.5)

Total change due to true up

  —   (0.1)  — 

Total removed due to audit payment

  —   (0.4)  — 

Foreign currency translation

  (0.1)  0.2   (0.3)

Ending balance

 $28.9  $28.4  $26.7 

 ​

If the balance in the table above is recognized, the balance would favorably affect our effective tax rate in future periods.

 

We recognize interest and penalties on uncertain tax positions as a component of the income tax provision. At December 31, 2024, 2023 and 2022, the total accrued interest balance relating to uncertain tax positions was $7.4 million, $5.8 million and $3.9 million, respectively. Potential penalties at December 31, 2024, 2023 and 2022, were insignificant and have not been accrued.

 

We are subject to U.S. federal, state, and local income tax, UK income tax, and income tax in several other jurisdictions. All these can be examined by the relevant taxing authorities. Significant tax jurisdictions that remain open for examination include: U.S. federal and state tax authorities for tax years starting with 2021 and 2013, respectively and for UK tax authorities for tax years starting with 2020.

 

It is reasonably possible that the total amounts of unrecognized tax benefits will change within the next 12 months due to completion of tax authorities’ exams or the expiration of statutes of limitations. Management estimates that the existing liability for uncertain tax positions could decrease by approximately $7.0 million within the next 12 months, excluding changes due to foreign currency translation.