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Will Labour’s plan to close private equity tax ‘loophole’ harm UK tech?

Labour private equity
Shadow Chancellor of the Exchequer Rachel Reeves. Image credit: Martin Suker / Shutterstock

Labour’s plan to close a tax “loophole” for private equity gains has drawn mixed reactions from the tech and investment community.

Some have argued that removing tax benefits for private equity investments disincentives capital being directed to UK businesses. Others have claimed it will generate much-needed government revenue and increase equality in taxation.

Announced in Labour’s general election manifesto, the policy would change the way tax is collected on carried interest – the revenue made by private equity managers after an exit.

It would mean profits made by a private equity fund would be taxed as income instead of the lower capital gains rate.

Roughly 2,000 people receive carried interest each year, amounting to £2bn a year and an average gain of £1m, according to the Resolution Foundation think tank....

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