“Private equity is the only industry where performance-related pay is treated as capital gains. Labour will close this loophole.”

Where it stands

From the 2026-27 tax year, carried interest (the share of a fund's profits paid to its managers) is taxed under income tax instead of capital gains tax (Finance Act 2026, section 58). Under the design announced at Autumn Budget 2024, a 72.5% multiplier applies to qualifying carried interest brought into the charge (para 5.67). As an interim step, the capital gains tax rates on carried interest rose to 32% from 6 April 2025.

What has happened

1. Jun 2024Labour manifesto pledges to stop treating private equity performance pay as capital gains, Promised
2. Oct 2024Autumn Budget 2024 says carried interest will be taxed within income tax from April 2026, and raises its capital gains tax rates to 32% from April 2025, In plan evidence
3. Mar 2026Finance Act 2026 receives Royal Assent; section 58 moves carried interest into income tax, Legislated evidence
4. Apr 2026Carried interest is taxed under income tax from the 2026-27 tax year, Delivered evidence

About the cost

Negative because the pledge raises money. Year used: 2028-29, the year Labour's costings use. The official Autumn Budget 2024 costing, covering both the 32% interim rate and the move into income tax, is £80m in 2028-29 (Table 5.1, line 21); central figure only. Other years: nothing in 2024-25 and 2025-26, a cost of £5m in 2026-27, £140m in 2027-28 and £85m in 2029-30. Labour's own costing was £565m in 2028-29 (manifesto page 127). Low–high is an editorial ±10% because the source gives a central figure only.

• HM Treasury: Autumn Budget 2024, Table 5.1, line 21
• Labour Party: Change, 2024 manifesto (PDF), costings, page 127

More detail

Related promises

• Abolish inheritance tax on the family homeConservative PartyPromised
• Apply a windfall tax to bank profitsGreen Party of England and WalesPromised
• Raise the tax-free personal allowance to £15,000Liberal DemocratsPromised