UK Tax on Management Fees, Co-Invest and Carry: Is Anything Safe?

15 December 2014
View Client Update

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.