v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Net Loss Before Income tax are as follows (in thousands):
Year Ended December 31,
20252024
United Kingdom$(290,109)$(221,661)
United States of America3,580 2,108 
Switzerland and Germany
973 419 
Net Loss Before Income Tax$(285,556)$(219,134)
The components of income tax expense are as follows (in thousands):
Year Ended December 31,
20252024
Current tax expense
United States of America
Federal
$(1,674)$(1,228)
State and local
(677)(24)
United Kingdom— 8 
Switzerland and Germany
(252)(459)
Total current tax expense
(2,603)(1,703)
Deferred income tax benefit
United States of America
Federal
316 (140)
State and local
315 4 
United Kingdom— — 
Switzerland and Germany
— 311 
Total deferred income tax benefit631 175 
Total Income Tax Expense$(1,972)$(1,528)
The Company recorded an income tax expense of $2.0 million and $1.5 million, for the years ended December 31, 2025 and 2024, respectively.
Deferred tax assets consisted of the following at December 31, 2025 and 2024 (in thousands):
December 31,
20252024
Deferred tax assets:
Other differences$15,470 $18,761 
Tax losses237,927 136,406 
Fixed assets(1,816)5,069 
Total deferred tax assets251,581 160,236 
Valuation allowances(248,021)(156,997)
Net Deferred Tax Asset$3,560 $3,239 
The movements in the deferred tax asset valuation allowance consisted of the following at December 31, 2025 and 2024 (in thousands):
December 31,
20252024
Valuation allowance as of January 1,
$(156,997)$(122,958)
Decrease in valuation allowance through net loss
(75,459)(36,670)
Foreign currency translation adjustments
(15,565)2,631
Valuation allowance as of December 31,
$(248,021)$(156,997)
A reconciliation of income tax benefit at the United Kingdom statutory corporate income tax rate to the income tax expense is as follows (in thousands): 
Year Ended December 31,
20252024
Net loss before taxes$(285,556)$(219,134)
U.K. statutory tax rate25.0%25.0%
Income tax benefit at U.K. statutory tax rate71,38954,783
United Kingdom
Tax-exempt reimbursable tax credits included within research and development expense—4,934
Non-deductible expenses(17,505)(26,757)
Adjustments in respect of prior years19,7452,363
Valuation allowance changes affecting the provision for income taxes
(74,571)(36,022)
Other, net(198)71
Other foreign jurisdictions(832)(900)
Total income tax expense$(1,972)$(1,528)
Current income tax expense
$(2,603)$(1,703)
Deferred income tax benefit$631$175
Effective rate of income tax0.7%0.7%
The Company is headquartered and has subsidiaries in the United Kingdom. Additionally, the Company has subsidiaries in the United States, Germany and Switzerland. The Company incurs tax losses in the United Kingdom. The United Kingdom corporate income tax rate was 25% for the years ended December 31, 2025 and 2024, respectively. The Company’s subsidiary in the United States has generated taxable profits due to a service agreement between the Company’s subsidiaries in the United States of America and the United Kingdom. The United States of America. federal corporate income tax rate was 21% for the years ended December 31, 2025 and 2024.
Deferred tax assets resulting from loss carryforwards, fixed assets and retirement benefits, with total deferred tax assets increasing by $0.3 million in 2025. The Company has recorded a valuation allowance against the net deferred tax asset where the recoverability due to future taxable profits is unknown. The $3.6 million deferred tax asset balance is related to the Company's United States of America subsidiary entity.
At December 31, 2025, the Company had United Kingdom trading losses carryforward of $953.6 million. These losses are carried forward indefinitely under local law, but are subject to numerous utilization criteria and restrictions.
As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets at each reporting date. Accounting for income taxes guidance requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance.
The Company operates in multiple jurisdictions with complex tax and regulatory environment and its tax returns are periodically audited or subjected to review by tax authorities. The following table summarizes tax years that remain subject to examination by tax jurisdiction as of December 31, 2025:
Jurisdiction
Open Tax Years Based on Originally Filed Returns
United Kingdom
2022 - 2024
United States
2022 - 2024
Research and development U.K. tax credits
The benefits from U.K. research and development tax credits are recognized in the statements of operations and comprehensive loss as a reduction of research and development expenses and represents the sum of the research and development tax credits recoverable in the U.K..
The Small Medium Enterprise regime has been particularly beneficial to the Company, as under such program the trading losses that arise from the Company's qualifying R&D activities can be surrendered for a cash rebate of up to 33.35% of qualifying expenditure incurred prior to April 1, 2023 and decreasing to 18.6% after April 1, 2023. The U.K. Government also enacted further changes to the SME regime effective from April 1 2023 (with some amendments effective for accounting periods commencing after April 1 2024) which included the introduction of a new rate for R&D intensive companies of 27% . Qualifying expenditures largely comprise employment costs for research staff, consumables, outsourced contract research organization costs and utilities costs incurred as part of research projects for which the Company do not receive income. A large proportion of costs in relation to the Company's pipeline research, clinical trials management and manufacturing development activities, all of which are being carried out by the Company's wholly owned subsidiary Autolus Limited, are eligible for inclusion within these tax credit cash rebate claims.
Under the RDEC program, tax credits for qualifying R&D expenditure incurred prior to April 1, 2023 are granted at a headline rate of 13% and can generate cash rebates of up to 10.5% of qualifying R&D expenditure. The headline rate of RDEC increased to 20% on April 1, 2023 and can generate cash rebates of up to 15% on qualifying R&D expenditure incurred from this date.
Amendments to the current SME and RDEC programs contained in the Finance Act 2024 (unless limited exceptions apply) introduce restrictions on the tax relief that can be claimed for expenditure incurred on sub-contracted R&D activities or externally provided workers, where such sub-contracted activities are not carried out in the U.K. or such workers are not subject to U.K. payroll taxes, and (ii) merge the SME and RDEC programs into a single scheme which would generate net cash benefit of up to 15% of the qualifying expenditure for profit making companies and up to 16.2% for loss making companies. These changes take effect from periods commencing after April 1 2024.
During the year ended December 31, 2024, the Company met the conditions of the SME regime, but it could also make claims under the RDEC regime to the extent that its projects are grant funded.
In the accounting period to December 2023, based on the relevant tax legislation, the Company considered that it met the conditions of the R&D intensive scheme, and have made a claim on this basis. This is subject to agreement by the U.K. tax authority who, based on their non-statutory guidance, considers the basis for calculating whether a company meets the intensive criteria includes expenditure which is in conflict with the tax legislation. The position is uncertain and the legislation is currently untested in the U.K. courts. If the Company's claim is unsuccessful, normal SME relief will be available and there will be a material reduction in the value of the tax credit obtained (18.6% as opposed to 26.97% net benefit).
From January 2025, the Company does not qualify as a small or medium-sized enterprise under the SME program, based on size criteria concerning employee headcount, turnover and gross assets. However, the Company may make a claim under the merged RDEC regime beginning with periods ending December 31, 2025. It should be noted, however, that the types of qualifying expenditure in respect of which the Company may make claims under the RDEC regime are more restricted than under the SME regime (for example, it may be the case that certain subcontracted costs in respect of which claims may be made under the SME regime do not qualify for relief under the RDEC regime).
R&D tax credits of $10.6 million and $16.7 million were recognized for the years ended December 31, 2025 and 2024, respectively, and are recorded as offsets to research and development expense in the Company's consolidated statement of operations and comprehensive loss.