UK PE carried interest hits record £5.4bn
UK-based private equity professionals received a record £5.4bn in carried interest and other profit-related payments during the 2024-25 tax year, a 50% increase on the previous year, as managers moved to crystallise gains ahead of increases to the carried interest tax rate, according to a report by Bloomberg.
UK private equity professionals earned a record £5.4 billion in carried interest and other profit-related payments during the 2024-25 tax year, a 50% increase from the previous year, according to Bloomberg. This surge in payouts was driven by managers seeking to capitalize on gains before higher carried interest tax rates took effect, according to a report by Bloomberg citing HM Revenue & Customs data.
The resulting tax receipts totaled £1.45 billion, surpassing the previous record of £1.34 billion set in 2021. Despite a subdued exit environment, with UK private equity sales totaling approximately £42 billion, down from £91 billion in 2023, the tax change reportedly spurred managers to realize profits early. The Labour government raised the capital gains tax rate for carried interest from 28% to 32% in April 2025, with a further increase to 34% in April 2026, following a campaign pledge to address perceived tax advantages for private equity executives.
Over 65% of UK private equity exits were sales to other private equity firms, the highest proportion in a decade, highlighting industry challenges. Significant transactions included Advent International's £2.7 billion sale of logistics firm Evri to Apollo Global Management in July 2024 and Kurt Geiger's £300 million sale to Steve Madden in February 2025.
Public market listings and strategic sales to corporations accounted for a small share of exits, reflecting difficulties in achieving desired valuations amid rising interest rates and tighter private market multiples. Alternative liquidity solutions, such as continuation funds, preferred equity, and additional borrowing, have become more prevalent.
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