Small UK Fund Managers Face Extra Tax Burden on Carried Interest

Small and mid-market private equity fund managers in the UK face significant administrative challenges as they respond to new carried interest tax rules set to take effect next year.

The planned legal changes will require firms to monitor investments more closely, track the duration of asset holdings, monitor the movements of globally mobile staff, and assess whether income should be taxed in the UK, even if it’s already taxed elsewhere, tax advisers say.

That will be a huge “administrative burden,” especially on smaller fund managers, Jonathan Cantor, partner at Burges Salmon, said.

One big change is that the rules ...