Uncertainty over government plans to change the taxation of carried interest is driving privat equity away from London, says Edwin Richards

Last week, some of the world’s biggest private equity firms urged the UK government to dilute proposed changes to the treatment of carried interest. But plenty are left wondering what this means in practice and whether the impact will be so significant.

Carried interest is the means by which private equity (PE) managers are rewarded for the performance of the funds they manage. Historically it has been treated as a capital gain rather than income because the PE manager has invested cash in the fund being managed to earn the right to carried interest. The highest marginal tax rate for a carried interest gain rose from 28 per cent to 32 per cent from 6 April 2025. The basic rate band is going up from 18 per cent........

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