Budget update and reflections on QAHC regime one year on (gated)

The Spring Budget was a relatively quiet affair for the private equity industry. Although the detail will be saved for the Spring Finance Bill (due to be published later this month) it is worth noting a few measures. The government has introduced an election for carried interest holders which will enable them to be taxed on an accruals basis, effectively accelerating their liability. This election will be helpful for fund managers who need to claim double tax relief in another jurisdiction following a change in HMRC’s guidance. The government also announced that it no longer plans to move ahead with its proposal to reform sovereign immunity from taxation by removing immunity from trading income and real estate income and gains, with the current exemption continuing to operate as it does now. Although this will be welcome news, it is a policy that may be picked up by a new government. Finally, a number of changes to the QAHC regime and GDO rules can be expected in the Spring Finance Bill. These changes focus on improving the operation of the rules and in particular make it easier for multi-vehicle arrangements to qualify.

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