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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income taxes | 17. Income taxes T he Group operates in the U.K. and is subject to income taxes in that jurisdiction. The U.K. tax rate applied for 2024 was 25% (23.5% for 2023), which results from applying the enacted statutory rate of 19% from January 1, 2023 through April 1, 2023, and 25% for the remainder of 2023 and 2024. U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The entire tax expense of $0.8 million relates to current tax as shown below. No deferred tax was recognized in the year.
|  | Year ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | $000s |  |  | $000s |  |  | $000s |
Current Tax Expense |  |  |  |  |  |  |  |  |
Current Year |  |  | 845 |  |  |  | 956 |  |  |  | 192 |
Changes in estimate related to prior years |  |  | - |  |  |  | - |  |  |  | 496 |
Total current tax |  |  | 845 |  |  |  | 956 |  |  |  | 688 |
Deferred Tax Expense |  |  |  |  |  |  |  |  |
Origination and reversal of temporary differences |  |  | - |  |  |  | - |  |  |  | - |
Recognition of previously unrecognized tax losses |  |  | - |  |  |  | - |  |  |  | - |
Recognition of previously unrecognized tax losses (derecognition of previously recognized) deductible temporary differences |  |  | - |  |  |  | - |  |  |  | - |
Taxation |  |  | 845 |  |  |  | 956 |  |  |  | 688 |
Reconciliation of the income tax credit at standard rate of U.K. corporation tax to the current tax credit are as follows:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | $000s |  |  | $000s |  |  | $000s |
Loss before tax |  |  | (44,464 | ) |  |  | (53,272 | ) |  |  | (49,646 | )
Tax credit at the standard rate of U.K. corporation tax of 25% (2023: 25%; 2022: 19%) |  |  | 11,116 |  |  |  | 12,530 |  |  |  | 9,432 |
Income not taxable |  |  | 3,356 |  |  |  | 2,286 |  |  |  | 1,346 |
Effect of overseas tax rate |  |  | 308 |  |  |  | 334 |  |  |  | 673 |
Change in valuation allowances |  |  | (15,423 | ) |  |  | (15,641 | ) |  |  | (11,456 | )
Adjustment in respect of prior year |  |  | - |  |  |  | - |  |  |  | (495 | )
Effect of overseas taxes |  |  | (202 | ) |  |  | (465 | ) |  |  | (188 | )
|  |  | (845 | ) |  |  | (956 | ) |  |  | (688 | )
A reconciliation of the standard U.K. statutory income tax rate to the effective tax rate is as follows:
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (%) |  |  | (%) |  |  | (%) |
Income tax using U.K. statutory rate |  |  | (25.0 | ) |  |  | (23.5 | ) |  |  | (19.0 | )
Income not taxable |  |  | (7.5 | ) |  |  | (4.3 | ) |  |  | (2.7 | )
Effect of overseas tax rate |  |  | (0.7 | ) |  |  | (0.6 | ) |  |  | (1.4 | )
Change in valuation allowances |  |  | 34.7 |  |  |  | 29.4 |  |  |  | 23.1 |
Adjustment in respect of prior year |  |  | - |  |  |  | - |  |  |  | - |
Effect of overseas taxes |  |  | 0.5 |  |  |  | 0.9 |  |  |  | 0.4 |
Effective tax rate for loss from continuing operations |  |  | 1.9 |  |  |  | 1.9 |  |  |  | 0.4 |
The Group did no t have any deferred tax liabilities as at December 31, 2024 and 2023. Components of the Group’s deferred tax assets as at December 31, 2024 and 2023 are as follows:
|  | Year ended December 31, |
|  | Gross |  |  | Gross |
|  | 2024 |  |  | 2023 |
|  | $000s |  |  | $000s |
Deferred tax assets: |  |  |  |  |  |
Trading Losses 1 |  |  | 55,316 |  |  |  | 57,563 |
Share-based payments |  |  | 3,663 |  |  |  | 3,670 |
Capital losses |  |  | 2,467 |  |  |  | 2,506 |
Gross deferred tax asset |  |  | 61,446 |  |  |  | 63,739 |
Valuation allowance |  |  | (61,446 | ) |  |  | (63,739 | )
Total deferred tax, net |  |  | - |  |  |  | - |
(1) Included i n trading losses is $7.4 million of accumulated tax losses as of December 31, 2024 ($8.6 million as of December 31, 2023) related to its operations in Germany for corporate income taxes and $6.5 million of accumulated losses related to trade taxes in its German entity ($7.5 million as of Decem ber 31, 2023). Movements in deferred tax valuation allowance:
|  | Year ended December 31, |
|  | 2024 |  |  | 2023 |
Valuation allowance at January 1 |  |  | 63,739 |  |  |  | 61,703 |
(Decrease)/increase in valuation allowance |  |  | (2,293 | ) |  |  | 2,036 |
Valuation allowance at December 31 |  |  | 61,446 |  |  |  | 63,739 |
Management has reviewed cumulative tax losses and projections of future taxable losses and determined that it is not more likely than not that they will be realized. Accordingly, valuation allowances have been provided over deferred tax assets. Since the Group does not have an establishment or place of business in China, the Group is subject to withholding tax on gross income from dividends, interest, lease of property, royalties, and other China-source passive income. In 2021 the Group entered into a collaboration agreement with Hansoh, a biopharmaceutical company in China and received a $16.0 million upfront paym ent, which required withholding tax of $1.6 million. In 2024 the Group received a milestone payment of $2.0 million, which required withholding tax of $0.2 million. In 2023 the Group received a milestone payment of $4.0 million, which required w ithholding tax of $0.4 million. During the year, the Group had not yet received the research and development tax credit related to the prior year. The Group has recognized $13.2 million in respect of the current year for unfunded projects that are permissible to claim under the SME scheme (2023: $9.9 million; 2022: $9.7 million). In addition, in 2024 we have also recognized $0.3 million related to the RDEC scheme (2023: $1.1 million; 2022: $1.3 million).

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