Key takeaways

On Wednesday 10 December 2014 the UK Government released draft legislation that will effect significant changes in the UK taxation of management fees:

• The draft legislation, which is proposed to be introduced for the 2015/16 tax year, will affect both UK funds and non-UK funds with UK based management team members;
• The draft legislation targets disguised management fees arrangements generally (although carried interest and co-invest are intended to be excluded from the scope of the new rules, the drafting is potentially broad enough to catch other fund returns); and
• If applicable, the draft legislation would result in higher rates of tax being imposed on UK members of the management team (at the top rate of 45%), including UK residents that are not domiciled in UK.