UK to Impose 32% Tax on Private Equity Carried Interest from April 2025

Private equity ​(PE) investment companies in the UK will face a​ significant ‌tax⁤ increase on carried interest, with the tax rate set to rise to 32% from April 2025. This announcement was made by British Chancellor of​ the ​Exchequer Reeves⁣ in his recent financial report, which outlined⁣ plans to increase ⁣taxes across various sectors.

The ​current tax rate on carried interest stands at 28%. The proposed ‌tax increase is expected to generate an‌ additional £300 million in tax revenue by April 2030, approximately £60 billion yen.

Michael Moore, ⁣Chief Executive of the British Private Equity and Venture Capital Association (BVCA), acknowledged the need for a tax system⁢ that ⁢reflects ⁤the long-term, risk-taking nature of ‍PE investment. He stated that the tax⁣ increase would help ensure the continued growth and​ competitiveness of⁣ the UK’s ⁤private equity sector in an increasingly global environment.

The UK’s decision to increase taxes⁤ on private equity carried interest is part of⁢ a broader effort to reform its tax system ⁤and ⁢promote economic growth.‌ The move is expected to have significant ⁢implications for private equity firms operating in the UK, and may influence investment⁣ decisions in the sector.