11  Income tax

This note provides an analysis of the Group’s income tax expense, and shows what amounts are recognized directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to the Group’s tax position.

The deferred tax expense/(benefit) comprises temporary differences attributable to:

A reconciliation of the tax expense applicable to income/(loss) before income tax at the statutory rate for the jurisdiction in which the Company and the majority of its subsidiaries are domiciled to the tax expense at the effective tax rate is as follows:

As of December 31, 2025, the Group had estimated unused tax losses of approximately $200.8 million (2024: $172.9 million) that can be carried forward indefinitely, subject to final assessment by the tax authorities. Unrecognized tax losses are due to lack of certainty of future taxable profits that can utilize the loss carry forward.

Deferred Tax Assets and Liabilities

The following are the major deferred tax liabilities and assets recognized by the Group and movements thereon as of December 31, 2025 and 2024:

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

No deferred tax asset has been recognized from tax losses as it is not considered probable that there will be future taxable profits available.

Unrecognized deferred tax 

The amount of gross temporary differences and unused tax losses for which no deferred tax asset is recognized in the balance sheet was $197.0 million (2024: $172.4 million). This amount included unused Gibraltar tax losses of $155.8 million (2024: $140.8 million), U.K losses of $17.3 million (2024: $13.5 million), and U.S federal tax losses of $18.2 million (2024: $11.6 million) and U.S. state tax losses of $9 million (2024: $6.5 million) which can only be recovered against future taxable profits of the respective entities.

No deferred tax was recognized on these losses due to the absence of convincing evidence regarding the availability of sufficient future taxable profits against which to recover them. Deferred tax is not recognized in respect of the Group’s investments in subsidiaries and branches where the Group is able to control the timing of remittance or other realization and where remittance or realization is not probable in the foreseeable future.