Most would probably agree that the current rate of tax on carried interest is too low. But whatever solution is adopted, a balance needs to be struck between complexity and ‘fairness’, writes Heather Self (Blick Rothenberg).
Carried interest is the reward that executives of a private equity (PE) firm earn when the underlying PE fund successfully sells one of its investments. That reward is currently usually taxed as a capital gain at a rate of 28% rather than as income at up to 45%.
The recent debate
Almost two years ago the Labour Party announced that it would close the ‘carried interest loophole’ if it is elected (‘Labour plans to raise £500m by closing fund managers’ tax loophole’ The Guardian 19 September 2021). At the time Labour calculated that this would raise about £440m which is a relatively small amount in the...
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Most would probably agree that the current rate of tax on carried interest is too low. But whatever solution is adopted, a balance needs to be struck between complexity and ‘fairness’, writes Heather Self (Blick Rothenberg).
Carried interest is the reward that executives of a private equity (PE) firm earn when the underlying PE fund successfully sells one of its investments. That reward is currently usually taxed as a capital gain at a rate of 28% rather than as income at up to 45%.
The recent debate
Almost two years ago the Labour Party announced that it would close the ‘carried interest loophole’ if it is elected (‘Labour plans to raise £500m by closing fund managers’ tax loophole’ The Guardian 19 September 2021). At the time Labour calculated that this would raise about £440m which is a relatively small amount in the...
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