Carried interest is a form of performance-related reward received by fund managers, primarily within the private equity industry which is taxable under the capital gains tax regime not income tax.

Action will be taken swiftly with a brief five-week consultation period with the Chancellor planning to see out detailed plans at the Budget on 30 October.

The Treasury has launched a consultation to gauge reaction from key stakeholders to ensure it brings in plans which address the carried interest loophole, with the possibility of charging higher tax rates above the current 18% and 28% capital gains tax regime.