On 15 September, the ACC and AIMA submitted their response to HM Treasury’s draft legislation for the revised carried interest tax regime.  

The response follows previous engagement with HMT and HMRC and sets out how the draft rules should be amended to meet the government’s policy objectives without undermining the UK’s competitiveness as a fund management hub.

Key points from the response include:

• Territorial scope: Extend simplifications for non-UK residents to all carried interest, to avoid disproportionate tax liabilities and double taxation risks.

• Double taxation relief: HMRC should publish clear guidance on the application of DTR and coordinate with other tax authorities to prevent conflicts, particularly with US tax rules.
• Credit fund definition: Broaden to include economically similar instruments such as preference shares and alternative finance arrangements.
• Meaning of debt investment: Clarify rules around unconditional obligations where borrowers hold extension rights.
• Evergreen funds: Modify conditional exemptions so that NAV-based carried interest in evergreen credit funds can qualify under the regime.
• Tax distributions: Ensure that payments under assumed-rate systems are accommodated within the regime.

The ACC and AIMA will continue to engage with HMT and HMRC through the carried interest technical working group, which is due to reconvene in late September. This will be the key forum for further discussion of draft guidance, including on double tax agreements.

For further information please contact Nicholas Smith ([email protected])