Government makes concessions on carried interest plans

In a policy update on the tax reform of carried interest published on 5 June the Government has confirmed among other things that it will not be proceeding with two proposed additional qualifying conditions and it will limit the territorial scope of the UK regime.

The update is in response to the consultation issued in the Autumn Budget 2024 which looked particularly at qualifying conditions for a new regime for the taxation of carried interest that is to be introduced from April 2026. Under these plans carried interest will be treated as trading profits subject to income tax and Class 4 NICs rather than as capital gains. A multiplier of 72.5% will be applied to adjust the amount of ‘qualifying’ carried interest. In other words where qualifying carried interest is received 72.5% will be brought into charge...