UK carried interest tax changes from April 2026
Significant reforms mean carried interest will be taxed as trading income, not capital, increasing complexity and potential tax exposure.
What’s changing?
Pre April 2026
Carried interest was taxed as capital gain at 28%–32%, resulting in about £27,000–£32,000 tax on £100,000 carry.
From April 2026
Taxed as trading income with Class 4 NIC applying.
Qualifying Carry (40+ month holding period)
• Only 72.5% taxable
• Effective tax rate: ~34%
• £100k → ~£65,925 net
Non Qualifying Carry (<36 months)
• 100% taxable as income
• Effective tax rate: ~47%
• £100k → ~£53,000 net
Why it matters?
• Holding periods now directly impact tax outcomes
• Faster exits mean significantly higher tax
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