A tax raid on the lucrative rewards enjoyed by dealmakers at private equity firms has been watered down after intense lobbying by the buyout industry.
Private equity executives can earn life-changing sums from carried interest, which is their share of the profits generated by successful investments overseen by their firms.
Carried interest is typically taxed as a capital gain at 28 per cent, but the government has said that the rate will increase to 32 per cent from April, before a new bespoke regime is introduced in 2026 that brings it within the income tax framework.
While this will result in an effective marginal tax rate of 34.1 per cent, according to the Office for Budget Responsibility, this is far lower than the 45 per