Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the potential (1) gain, or (2) loss, to the Treasury of equating capital gains and income tax votes.

Sums arising which meet the definition of carried interest are properly assessed as chargeable gains subject to capital gains tax (CGT) of 18 per cent or 28 per cent for higher rate taxpayers.

In some circumstances, it is possible for sums meeting the definition of carried interest to be subject to income tax and additionally, capital gains tax. Here, double taxation would be a disproportionate outcome so relief is provided from this higher rate CGT charge to reduce the effective taxation, but only down to the higher of the two rates.

No assessment has been made of the cost of relieving these instances of double taxation.

In 2020, the then Chancellor commissioned the Office of Tax Simplification (OTS) to carry out a review of Capital Gains Tax (CGT). The OTS provided a costing on aligning CGT rates with those of Income Tax. Please see Paragraph 2.19 of the attached publication.