Private Equity managers have won a reprieve from a tax charge.

The industry had been anxiously awaiting a review of the rules on managers shareholidngs. Private equity chiefs often acquire shares at the same price as other shareholders but see their holding ratcheted up to give them an entitlement to a higher percentage of the company then they first paid for.

HMRC released its view on the subject earlier this week, accepting that its attempt to charge income tax on managers' gains was untenable in law.

Experts welcomed the move but cautioned it may not be a lasting settlement.

Paul Megson, Private equity tax expert at KPMG, was quoted in the FT saying: 'It is good news but it is not entirely clear that the Revenue wouldn't want to legislate to get back to the position it had before.'