Private Equity Faces UK Boiling Frog Tax Treatment: Chris Hughes

It sounded like a harmless piece of fiscal engineering. Chancellor of the Exchequer Rachel Reeves used her UK budget speech to increase the tax levied on buyout barons’ performance fees to 32% from 28% in 2025. At the same time, she launched a more comprehensive review of how private equity would be treated. In fact, the devil was in the detail.

The UK Treasury has already decided on the conceptual framework of future reform and it’s not what the industry was looking for.

At issue is so-called “carried interest.” This is the cut of clients’ investment gains that goes to a private equity ...