UK-based private equity professionals received a record £5.4bn in carried interest and other profit-related payments during the 2024-25 tax year, representing a 50% increase on the previous year, according to Private Equity Wire.
The increase was linked to managers moving to crystallise gains ahead of increases to the carried interest tax rate, with the item citing a report by Bloomberg, according to Private Equity Wire.
HMRC data and record tax receipts
Figures from HM Revenue & Customs show that private equity partners generated their largest recorded payout since the tax authority began collecting the data in 2017, according to Private Equity Wire.
The resulting tax receipts reached £1.45bn, surpassing the previous record of £1.34bn recorded in 2021, according to Private Equity Wire.
Exit environment and UK PE sales volumes
The sharp increase in carried interest and profit-related payouts came despite a relatively subdued exit environment, according to Private Equity Wire.
The report cited PitchBook data showing that UK private equity sales totalled approximately £42bn during the year, which was less than half the £91bn recorded in 2023, according to Private Equity Wire.
Carried interest tax changes from April 2025 and April 2026
The prospect of higher taxes appeared to provide an additional incentive for managers to realise profits before changes to the UK’s treatment of carried interest took effect, according to Private Equity Wire.
The Labour government increased the capital gains tax rate applying to carried interest to 32% from April 2025, up from 28%, with a further increase to 34% set to take effect from April 2026, according to Private Equity Wire.
The changes followed an election campaign pledge to address what Labour described as a favourable tax treatment for private equity executives, according to Private Equity Wire.
Exit mix shifts toward sponsor-to-sponsor deals and alternative liquidity
More than 65% of UK private equity deals were sales to other private equity firms, which PitchBook data described as the highest proportion in a decade, according to Private Equity Wire.
Advent International sold UK logistics business Evri to Apollo Global Management for a reported £2.7bn in July 2024, and footwear brand Kurt Geiger was sold to US-listed retailer Steve Madden for nearly £300m in February 2025, according to Private Equity Wire.
Public market listings and strategic sales to corporate buyers accounted for a relatively small share of exits, reflecting reported difficulty for managers in realising investments at desired valuations since interest rates rose and private market multiples came under pressure, according to Private Equity Wire.
The reliance on sponsor-to-sponsor transactions coincided with increased use of alternative liquidity solutions, including continuation funds, preferred equity and additional borrowing, according to Private Equity Wire.
