Carried interest
LiliS
Member
I have a client who has received high carried interest in the previous tax years. As it is subject to capital gains tax rather than income tax, do these figures count towards relevant income when calculating clients available annual allowance and potential carry forward amounts? I think it does not, but wanted to check with someone who maybe has experience and has come across this?
Also, I know that the Government proposed changes in taxation from 6 April 2026 where existing rates of CGT on carried interest of 18% (where the gain falls within the basic rate tax band) and 28% (for higher rate taxpayers) would be increased to a single rate of 32% from 6 April 2025.
In my scenrio, the carried interest would be paid to the family even on clients death. Ie it would be paid direct to the children. From tax perspective, how would these payments be treated if client died, lets say in the next year? If the payment is subject to CGT, would there be no CGT on death? Or would these payments still be subject to CGT or income tax from 6.04.2026, albeit only 72.5% of carried interest that is classed as "qualifying carried interest"?