TaxCorporate TaxPrivate equity bosses enjoy extra tax break

Private equity bosses enjoy extra tax break

Revenue rule from 1987 allows buy-out firms to reduce tax on carried interest

Private equity executives who only have to pay 10% tax on carried interest
they receive can reduce the tax they pay even further by taking advantage of a
20-year-old HMRC memorandum.

According to the FT the 1987 rule allows buy-out executives to
offset 20% of the initial price of the assets they buy against the already low
tax rate they pay on carried interest.

The inner workings of private equity have been exposed following intense
scrutiny from unions and politicians, who have criticised
the private equity firms of destroying jobs, avoiding tax and opaque governance.

Leading private equity heads from Blackstone, 3i, Carlyle Group and KKR are
all to answer questions on these issues at a Treasury select committee meeting
this afternoon.

According to City A.M., select committee member Angela Eagle said
more firms were to be called before the committee in the future.

Further reading:

Terra Firma CEO leaps to private equity defence

Steps the Treasury could take to tax buyout bosses at a
higher rate

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