TLDR:

Key points:

• Labour party plans to close the ‘carried interest’ private equity tax loophole.
• Investor Tim Levene warns against extending the tax changes to venture capital.

Augmentum Fintech manager Tim Levene has cautioned the Labour party against including venture capital in their plans to close the ‘carried interest’ tax loophole for private equity professionals. The Labour manifesto promises to tax proceeds from carried interest at a higher rate by treating it as income rather than capital gains. Levene believes that venture capital should be exempt from this tax crackdown.

In its manifesto, Labour specifically targets private equity, highlighting the discrepancy in tax treatment for performance-related pay in this industry. The party aims to level the playing field by closing this loophole and subjecting high earners to a higher tax rate. Levene’s concern is that extending these tax changes to venture capital could have unintended consequences for the industry.

It remains to be seen how Labour will proceed with their tax reforms and whether they will consider the distinction between private equity and venture capital in their policy decisions.