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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income taxes

17. Income taxes

The 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 not 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 in 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 December 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 payment, 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 withholding 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).