London (Business Emerge), September 5: Upcoming changes in Britain’s tax regulations concerning the private equity sector may prompt wealthy executives to seek opportunities outside the UK, according to CVC, a leading private equity firm. The government’s latest discussions on modifying tax breaks for carried interest—the fees earned when assets are sold—have sparked concern within the industry. This debate comes ahead of a broader fiscal announcement expected from the new Labour government in October.
Fred Watt, Chief Financial Officer at CVC, expressed optimism that the government would consider the sector’s concerns. “I believe the government would not want the UK to lose its competitive edge,” Watt stated. He emphasized the potential impact on the nation’s economic appeal if these tax changes go through without proper consideration.
Rob Lucas, CEO of CVC, echoed similar sentiments, suggesting that the potential revisions could influence where their personnel choose to operate. “We frequently see our staff relocating. Will this affect decisions on where they base themselves? Probably,” Lucas shared during a press briefing following the company’s debut financial results as a publicly listed entity. Despite his own personal stake in the firm—amounting to $640 million—Lucas emphasized that CVC’s global reach allows flexibility in staffing locations.
The UK finance ministry has yet to comment on these concerns. Carried interest is a source of significant wealth for a small number of private equity professionals in Britain. However, critics argue that these performance-based earnings should be taxed as income, as they are derived from managing other investors’ capital.