Increase in Capital Gains Tax on Carried Interest for Private Equity

My views on "Increase in Capital Gains Tax on Carried Interest for Private Equity"

As anticipated, the UK Budget has announced an increase in capital gains tax (CGT) on carried interest for private equity.

Starting in April 2025, the tax rate will rise from the current 28% to 32%.

Additionally, UK Finance Minister Rachel Reeves has signaled more changes for April 2026, with the goal of making the carried interest rules “simpler, fairer, and more effectively targeted.”

UAE Market: We have seen a significant increase in UK managers, hedge funds, PEs and other financial entities exploring opportunities in UAE esp in ADGM and DIFC. With the current tax landscape and anticipated tax increase in carried interest, we can expect an even greater interest from managers considering deeper engagement with the UAE market.

UK Market: The UK is a mature market for hedge fund managers, PEs and VCs - so immediate impacts may be limited. However, this environment may encourage managers to explore alternative options, such as relocating operations or part of operations to the UAE's zones such as ADGM and DIFC or other international hubs."