The UK’s Labour party has vowed to press ahead with plans to impose higher taxes on private equity bosses in the run-up to next month’s general election, which Labour is widely-expected to win according to polls.
The left-of-centre party has included in its election manifesto published today a pledge to consult on closing the controversial “carried interest” tax loophole that allows private equity bosses to pay tax at 28% as a capital gain rather than the higher top marginal rate of income tax at 45%.
Carried interest, often referred to simply as “carry”, is a share of the overall profits of a private equity fund paid out to a fund’s investment managers.
The future of what some regard as an unfair tax “loophole” is currently a matter of controversy and political debate in the UK and the US.
There are also carried interest regimes in France, Germany, Italy and Spain, many of which date from the creation of the private equity industry in the 1980s.
