Carried interest is a form of remuneration for fund managers, which has traditionally been taxed as capital. This treatment has been a point of contention, as highlighted in the Labour Party's manifesto, which pledged to address this issue. Our previous article, "Labour Targets Investment Manager Fees in Proposed Shake-up of Carried Interest," delves into the potential implications of such changes.
DWF is preparing a response to this call for evidence on behalf of its clients. While all feedback is welcome, the government has expressed particular interest in three areas:
1. Tax treatment reflecting economic characteristics:
The government is seeking input on how the tax treatment of carried interest can best reflect its economic characteristics. They acknowledge that carried interest is received under various circumstances and that the nature of the reward can differ in each case.
2. Structures and market practices:
The government is interested in understanding the different structures and market practices related to carried interest. They want to know how these variations should be considered in their reforms.
3. Lessons from other countries:
The government is looking to learn from the approaches taken by other countries in taxing carried interest. They note that many countries have specific regimes for this, but the details and conditions for access can vary.
