Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Carried interest definition

What does Carried interest mean? Carried interest is the performance‑linked share of a private fund’s profits allocated to the manager (typically the general partner or its executives) once investors have first received back their capital plus an agreed preferred return (hurdle). It is a contingent, subordinated entitlement designed to reward long‑term fund performance and align the interests of managers and investors. In practice, carried interest is set out in the fund’s limited partnership agreement and related documents. It is commonly expressed as a percentage of total profits (industry norm c.20%), calculated and distributed under the fund’s waterfall, which may operate on a whole‑of‑fund...

UK carried interest for private equity fund managers: employment‑related securities (restricted securities), section 431 elections, PAYE/NICs, HMRC‑BVCA MoU, internationally mobile employees and disguised remuneration

Published by a LexisNexis Tax expert

Practice notes

FORTHCOMING CHANGE relating to the tax treatment of Carried interest:

After a call for evidence on the tax treatment of carried interest run over summer 2024, the Autumn Budget 2024 confirmed the government’s plan to introduce an updated carried interest tax regime from 6 April 2026, positioned within the income tax system with bespoke provisions to reflect the distinctive nature of this remuneration. A consultation then examined potential new eligibility conditions for entry to the regime, with the government’s response issued in June 2025. Draft legislation for the regime was released on 21 July 2025 for inclusion in Finance Bill 2026. The rules will apply to carried interest arising on or after 6 April 2026. These measures were affirmed at the 26 November 2025 Budget, which also noted amendments to the draft to incorporate stakeholder feedback. Pending commencement of the new framework, the capital gains tax rates applicable to carried interest were lifted to 32% with effect from 6 April 2025. For further information on this carried interest tax reform,...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Emily Clark

Travers Smith

Emily trained at Travers Smith and is a partner in the tax group. She specialises in the taxation of investment funds acting for private equity houses, hedge funds and real estate funds.She advises on fund formation and on tax-efficient structures for fund managers, carried interest and LLP conversions. She has particular expertise in tax structuring for non-domiciled investors and fund managers.Emily also has extensive experience of group restructuring, international tax, joint ventures and real Emily is a member of the British Property Federation´s tax committee....

Web page updated on 22/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...