Tax on carried interest earned in the UK is going up – but not before a consultation period between industry and government on the finer details of how such a rise should be applied.
To recap: UK chancellor Rachel Reeves has said that carried interest will be brought within the income tax framework from April 2026. This would result in an effective tax rate of around 34 percent, subject to consultation on qualifying conditions. For the 12 months until that date, from April 2025, carry will be taxed at 32 percent – up from the current rate of 28 percent.
The private equity industry has had mixed reactions to the news, as we detailed here.
Private Equity International wants to hear from UK-based investment professionals about the upcoming tax increase. Specifically, the government is consulting with industry until end-January 2025 on mandatory GP commitment amounts and minimum hold periods, for carried interest to receive qualifying treatment and not be taxed at the full income rate.
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