UK’s top private equity executives land £2.7bn windfall
UK’s top private equity managers get £2.7bn windfall amid growing calls for higher taxes on the sector
- A group of 255 dealmakers took home £2.7bn in a year through carried interest
- Among them are Simon Borrows of 3i Group and William Jackson of Bridgepoint
- The Labor Party has said it will close the interest rate loophole
Windfall: Simon Borrows of the 3i Group
The UK’s top private equity managers took home around £2.7bn in a year amid growing calls for higher taxes on the industry.
A group of 255 dealmakers — including Simon Borrows of 3i Group and William Jackson of Bridgepoint — earned a share of the loot through carried interest, profits made by executives on successful deals, during the 2020/21 tax year, according to analysis by Macfarlanes law firm.
Carried interest is an important part of private equity payments and can often be much higher than executive base salaries. But his tax status has been the subject of controversy in multiple countries.
Currently, the interest carried forward is taxed as capital gains — at 28 percent, compared to the top income tax rate of 45 percent. This means that the British taxpayer is estimated to be missing out on around £600 million a year.
The Labor Party has said it will close the loophole in the interest rate loop and add millions of pounds a year to the Treasury.
Labor leader Sir Keir Starmer and shadow chancellor Rachel Reeves have met with private equity bosses as they look to invest in the UK.
Macfarlanes has warned that higher taxes on carry interest could trigger an exodus of dealmakers.
“We just want to get this information out there so that Labor looks at it and gives itself some wiggle room,” said head of the tax authority Damien Crossley.
He added, “Maybe they can say they closed a loophole without shooting the golden goose.”
According to the report, 2,550 executives earned £3.4bn in carry interest and paid £952m in tax in 2020/21.