We’re in the midst of a brutal cost of living crisis. But, while the average person is stretching their income as far as they can and paying their fair share of tax, private equity fund managers earning seven and eight figure salaries pay just 28% tax – thanks to a sweetheart deal from HMRC.
The ‘carried interest’ loophole means that private equity executives’ returns are taxed as capital gains, at only 28%, rather than trading income, at 48%. This loophole wasn’t made by Parliament – but by HMRC, after successful lobbying from the private equity industry in 1987.
Were this loophole to be closed, HMRC could collect an estimated £600 million more in revenue each year, from just a couple of thousand people. To put that into context, it would cost the Government £544 million a year to expand free school meals for all children from lower-income families in the UK.
At Good Law Project, we are launching a campaign to demand that HMRC applies the law as it is written rather than giving special favours to some of the wealthiest people around.