LUXFER HOLDINGS PLCLXFR
LUXFER HOLDINGS PLC Income Taxes Disclosure
Income Taxes
Income / (loss) before income taxes consisted of the following:
| Years ended December 31, | ||||||||||||||||||||||||||
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Domestic - U.K. | $ | 4.1 | $ | 10.7 | $ | 10.4 | ||||||||||||||||||||
| Foreign - U.S. | 15.8 | 11.4 | (23.5) | |||||||||||||||||||||||
Foreign - Other(1) | 2.3 | 4.4 | 3.4 | |||||||||||||||||||||||
| Income / (loss) before income taxes | $ | 22.2 | $ | 26.5 | $ | (9.7) | ||||||||||||||||||||
(1) "Foreign - Other" reflects non U.S. and U.K. income before income taxes.
The provision for income taxes consisted of the following:
| Years ended December 31, | ||||||||||||||||||||||||||
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Currently payable / (receivable) | ||||||||||||||||||||||||||
| Domestic | $ | 2.3 | $ | 0.5 | $ | 0.5 | ||||||||||||||||||||
| Foreign - U.S. Federal | $ | 1.0 | $ | 4.0 | $ | (0.3) | ||||||||||||||||||||
| Foreign - U.S. State | 0.6 | 0.9 | 0.8 | |||||||||||||||||||||||
Foreign - Other(1) | — | 0.9 | (0.1) | |||||||||||||||||||||||
| Total current taxes | $ | 3.9 | $ | 6.3 | $ | 0.9 | ||||||||||||||||||||
| Deferred | ||||||||||||||||||||||||||
| Domestic | $ | 0.9 | $ | 1.9 | $ | 1.3 | ||||||||||||||||||||
| Foreign - U.S. Federal | $ | 3.2 | $ | (0.4) | $ | (9.2) | ||||||||||||||||||||
| Foreign - U.S. State | 0.2 | 0.3 | (0.9) | |||||||||||||||||||||||
Foreign - Other(1) | 0.9 | 0.1 | 0.8 | |||||||||||||||||||||||
| Total deferred taxes | $ | 5.2 | $ | 1.9 | $ | (8.0) | ||||||||||||||||||||
| Total provision for income taxes | $ | 9.1 | $ | 8.2 | $ | (7.1) | ||||||||||||||||||||
(1) "Foreign - Other" reflects non U.S. and U.K. income taxes.
Differences between the financial reporting and the corresponding tax basis of assets and liabilities and the different income tax rates and laws applicable to the Company, among other factors, give rise to permanent differences between the statutory tax rate applicable in the U.K. and the effective tax rate presented in the Consolidated Income Statement, which in 2025, 2024 and 2023, were as follows:
| Years ended December 31, | ||||||||||||||||||||||||||||||||
| In millions | 2025 | Percent(1) | 2024 | Percent(1) | 2023 | Percent(1) | ||||||||||||||||||||||||||
| Income / (loss) before income taxes | $ | 22.2 | $ | 26.5 | $ | (9.7) | ||||||||||||||||||||||||||
Provision for income taxes at the U.K. statutory tax rate (2025: 25.0%%, 2024: 25.0%, 2023: 23.5%) | 5.6 | 6.6 | (2.3) | |||||||||||||||||||||||||||||
| Foreign Tax Effects | ||||||||||||||||||||||||||||||||
| United States: | ||||||||||||||||||||||||||||||||
| Tax impact of defined benefit pension settlement | — | — | % | — | — | % | (4.9) | 50.5 | % | |||||||||||||||||||||||
| Nontaxable or nondeductible items | 1.2 | 5.4 | % | 1.9 | 7.2 | % | 0.4 | (4.1) | % | |||||||||||||||||||||||
| Other | 0.2 | 0.9 | % | 0.5 | 1.9 | % | 0.6 | (6.2) | % | |||||||||||||||||||||||
| Other foreign jurisdictions | 0.3 | 1.4 | % | (0.7) | (2.6) | % | (0.1) | 1.0 | % | |||||||||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||||||||
| Difference of basis in accounting | 1.8 | 8.1 | % | (0.5) | (1.9) | % | — | — | % | |||||||||||||||||||||||
| Other | 0.5 | 2.3 | % | 0.6 | 2.3 | % | — | — | % | |||||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | % | — | — | % | (0.1) | 1.0 | % | |||||||||||||||||||||||
| Tax credits | (0.5) | (2.3) | % | (0.2) | (0.8) | % | (0.7) | 7.2 | % | |||||||||||||||||||||||
| Total provision for income taxes | $ | 9.1 | 41.0 | % | $ | 8.2 | 30.9 | % | $ | (7.1) | 73.2 | % | ||||||||||||||||||||
(1) Percent amounts represent the impact of each reconciling item on income / (loss) before income taxes.
14. Income Taxes (continued)
Income taxes (received) / paid for the years in 2025, 2024 and 2023, were as follows:
| Years ended December 31, | ||||||||||||||||||||||||||
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||||||
| U.K. | $ | — | $ | — | $ | — | ||||||||||||||||||||
| Foreign | ||||||||||||||||||||||||||
| U.S. | $ | 6.0 | $ | (1.2) | $ | 3.3 | ||||||||||||||||||||
| Other | 0.1 | — | — | |||||||||||||||||||||||
| Total foreign | $ | 6.1 | $ | (1.2) | $ | 3.3 | ||||||||||||||||||||
| Total paid / (received) | $ | 6.1 | $ | (1.2) | $ | 3.3 | ||||||||||||||||||||
Reconciliations of the beginning and ending gross unrecognized tax benefits were as follows:
| Years ended December 31, | |||||||||||||||||||||||
| In millions | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Beginning balance | $ | — | $ | 1.1 | $ | 1.1 | |||||||||||||||||
| Reductions due to expiry of statute of limitations | — | (1.1) | — | ||||||||||||||||||||
| Ending balance | $ | — | $ | — | $ | 1.1 | |||||||||||||||||
| Non-current | $ | — | $ | — | $ | 1.1 | |||||||||||||||||
The Company's unrecognized tax benefits relate to the pricing of its various inter-company transactions. The transfer pricing calculation is often multifaceted, taking into account economics, finance, industry practice, and functional analysis, a company's transfer pricing position often sits at a particular point along a wide continuum of possible pricing outcomes. The inherent subjectivity in pricing inter-company balances gives rise to measurement uncertainty. Management has considered the valuation uncertainty in determining the measurement of the uncertain tax position. There are no current tax audit examinations.
At December 31, 2025, 2024 and 2023, there was nil, nil, and $0.1 million of unrecognized tax benefits, respectively, that, if recognized, would affect the annual effective tax rate.
The Company recognizes interest accrued and penalties relating to unrecognized tax benefits in the income tax line. During the years ended December 31, 2025, 2024 and 2023, the Company recognized no amounts related to interest and penalties.
The following is a summary of the tax years open by major tax jurisdiction:
| Jurisdiction | Years open | |||||||||||||
| U.K. | 2021 - 2025 | |||||||||||||
| U.S. Federal | 2022 - 2025 | |||||||||||||
| U.S. State and local | 2022 - 2025 | |||||||||||||
| France | 2022 - 2025 | |||||||||||||
| China | 2022 - 2025 | |||||||||||||
| Canada | 2022 - 2025 | |||||||||||||
14. Income Taxes (continued)
Taxes have not been provided on undistributed earnings of subsidiaries where it is our intention to reinvest these earnings permanently or to repatriate the earnings only when it is tax efficient to do so. The amount of unremitted earnings at December 31, 2025 was approximately $99.4 million (at December 31, 2024: $108.6 million, at December 31, 2023: $92.6 million). If these earnings were remitted, it is estimated that the additional income tax arising would be approximately $1.5 million (at December 31, 2024: $1.2 million, at December 31, 2023: $1.3 million).
Deferred taxes were recorded in the Consolidated Balance Sheets as follows:
| December 31, | |||||||||||||||||
| In millions | 2025 | 2024 | |||||||||||||||
| Deferred tax assets | $ | 1.2 | $ | 4.1 | |||||||||||||
| Deferred tax liabilities | (18.4) | (14.0) | |||||||||||||||
| Net deferred tax liabilities | $ | (17.2) | $ | (9.9) | |||||||||||||
The tax effects of the major items recorded in deferred tax assets and liabilities were as follows:
| December 31, | |||||||||||||||||
| In millions | 2025 | 2024 | |||||||||||||||
| Deferred tax assets | |||||||||||||||||
| Accrued liabilities | 0.5 | 1.3 | |||||||||||||||
| Tax loss and credit carry forwards | 19.8 | 18.2 | |||||||||||||||
| Employee compensation benefits | 2.3 | 2.3 | |||||||||||||||
| Operating leases | 1.7 | 3.2 | |||||||||||||||
| Property, plant and equipment | — | 2.0 | |||||||||||||||
| Excess interest capacity carry forward | 1.9 | 1.9 | |||||||||||||||
| Other | — | 0.6 | |||||||||||||||
| Total deferred tax assets | 26.2 | 29.5 | |||||||||||||||
| Valuation allowances | (20.1) | (17.4) | |||||||||||||||
| Deferred tax assets, net of valuation allowances | $ | 6.1 | $ | 12.1 | |||||||||||||
| Deferred tax liabilities | |||||||||||||||||
| Property, plant and equipment | $ | 3.0 | $ | 2.2 | |||||||||||||
| Pension benefits | 13.7 | 12.2 | |||||||||||||||
| Goodwill and other intangibles | 5.2 | 4.8 | |||||||||||||||
| Operating leases | 1.4 | 2.8 | |||||||||||||||
| Total deferred tax liabilities | $ | 23.3 | $ | 22.0 | |||||||||||||
| Net deferred tax liabilities | $ | (17.2) | $ | (9.9) | |||||||||||||
Deferred tax liabilities and assets represent the tax effect of temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by the relevant jurisdiction's tax laws and regulations. Deferred tax assets and liabilities from the same tax jurisdiction have been netted, resulting in assets and liabilities being recorded under the deferred taxation captions on the consolidated balance sheet.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and carryforwards become deductible or creditable. Management considers the scheduled reversal of existing taxable temporary differences, projected future taxable income, and tax-planning strategies in making this assessment.
Reconciliations of the beginning and ending valuation allowances were as follows:
| Years ended December 31, | |||||||||||||||||
| In millions | 2025 | 2024 | |||||||||||||||
| Beginning balance | $ | 17.4 | $ | 17.0 | |||||||||||||
| Foreign exchange movements | 2.1 | (0.8) | |||||||||||||||
| Additions / (deductions) | 0.6 | 1.2 | |||||||||||||||
| Closing balance | $ | 20.1 | $ | 17.4 | |||||||||||||
At December 31, 2025, the Company had carried forward tax losses and tax credits of $77.0 million (U.K.: $16.4 million, non-U.K.: $60.6 million). Carried forward tax losses and tax credits for 2024 were $74.5 million (U.K.: $15.4 million, non-U.K.: $59.1 million) and for 2023 were $75.8 million (U.K.: $16.5 million, non-U.K.: $59.3 million). To the extent that these losses are not already recognized as deferred income taxes assets and are available to offset against future taxable profits, it is expected that the future effective tax rate would be below the standard rate in the country where the profits are offset. A valuation allowance of $20.1 million (2024: $17.4 million, 2023: $17.0 million) exists for deferred tax benefits related to the tax loss and tax credit carry forwards and other benefits that may not be realized. The apportionment of the valuation allowance between the U.K. and non-U.K. jurisdictions is U.K.: $4.1 million, non-U.K.: $16.0 million (2024: U.K.: $3.8 million, non-U.K.: $13.6 million; 2023: U.K.: $3.9 million, non-U.K.: $13.1 million). The non-U.K. valuation allowances relates to tax losses in France and Germany.
Of the carried forward tax losses and tax credits as at December 31, 2025, $3.1 million expire between 2026 and 2036, and $73.9 million are available for indefinite carry-forward.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 2, 2021 | |
| 2019 | Mar 10, 2020 | |
| 2018 | Mar 12, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.