Private equity executives and managers in the U.K. are facing a taxing situation as both the Treasury and Revenue & Customs departments are looking for ways to squeeze more money out of the biggest earners in the industry. The Sunday Times discloses that the British Venture Capital Association, in a letter to members last week, announced the government’s plans to impose higher tax rates on the best-compensated p.e. people because of “perceived anomalies,” based on the fact that a growing number of folks are becoming wealthy from a lightly taxed or scrutinized industry. Proposals include raising the capital-gains tax from 10% to about 40%. Another proposal would boost the carried interest tax from 10% to as much as 20%, but the BVCA expressed relief that that measure has been delayed from March to May, and then will be open to industry consultation with implementation not before the fall. The fear is that such heavy levies will take some of the shine off the glowing attraction of talent from other industries aspiring to make it big in private equity.
