Question to the HM Treasury:

To ask Her Majesty’s Government whether they intend to review the tax benefits extended to private equity partners by the application of a special rate to carried interest income.

The Government has taken decisive steps to ensure that asset managers pay their fair share of tax. In Summer Budget 2015, the Government closed loopholes to ensure that asset managers pay the right amount of Capital Gains Tax on their carried interest.

Legislation in the Finance Act 2016 ensures that this carried interest remains subject to a Capital Gains Tax rate of 28% for higher and additional rate tax payers, despite the cut in the main rate of Capital Gains Tax to 20%.

In addition, legislation in the Finance Act 2016 ensures that asset managers engaged in short-term trading activity are subject to income tax on the carried interest they receive, rather than Capital Gains Tax.