The Budget includes a measure to remove certain transitional rules that are no longer required for the effective taxation of amounts of carried interest that are charged to capital gains tax (CGT) under the carried interest rules which took effect from 8 July 2015
Current law on the taxation of carried interest within sections 103KA to 103KH taxation of chargeable gains act (TCGA) 1992 was introduced in 2015 with effect for carried interest arising on or after 8 July 2015.
Under existing rules, certain amounts of carried interest are excluded from section 103KA (and from some sections of the income tax act 2007) by reference to their arising in connection with disposals of assets before specified dates.
The proposals announced in the Budget, to be included in Finance Bill 2017-18, will confirm that the carried interest provisions in sections 103KA to 103KH TCGA 1992 will apply to all carried interest arising after 22 November 2017.
This legislation will remove the transitional provision which excluded sums of carried interest arising after 8 July 2015 and in connection with the disposal of a partnership asset before that date.
The move is expected to bring in an additional £20m in 2018/19, rising to £170m the following year, and £165m in 2020/21, then £150m and finally £145m in 2022/23.
