The UK's Labour Party has told private equity bosses that they will face higher taxes if the next general election, expected in 2024, goes the way that polls currently predict.
Party leader Sir Keir Starmer and shadow chancellor Rachel Reeves have met the leaders of buyout firms including Blackstone, Advent International and Brookfield Asset Management (TSX:BAM.A), according to a report in the FT, to discuss how private investment could play a role under a new government in supporting economic growth and the energy transition.
Starmer and Reeves have confirmed Labour plans to change the way bosses of these firms are taxed, including closing a loophole that allows them to evade how much tax they pay on their 'carried interest' in their firm's profits.
A policy on this will be included in the election manifesto that the party plans to finalise this year, a spokesperson confirmed, which is estimated could see the Treasury raise £440mln a year.
Private equity fund managers currently pay only 28% tax on their income.
A new analysis last month showed that this agreement is unlawful and that most fund managers should pay tax at the full marginal rate of 47%.
The PE industry hopes Labour will reform the law rather than abolish the current legal treatment, the newspaper reported.