UK Budget 2024: Comments on carried interest regime changes and planning reforms

Elliot Weston, corporate and finance partner: "The amendments to the carried interest regime are more measured than might have been expected. They are a long way from abolishing the carried interest regime. Nor do they seek to increase the tax rate on carried interest to match income tax rates. In broad terms, they will mean an increase of 4% in the effective tax rate, although from April 2026, additional conditions will be required to be met in order to benefit from the new income tax regime.

"There are no transitional provisions for existing funds, so where the additional conditions mean that fund managers do not qualify for the carried interest regime after April 2026, then these measures could be creating an imbalance between existing funds."

"Fund managers will have a short window until 5 April 2025 to trigger carried interest gains in order to benefit from the existing tax rates under the carried interest regime. The 32% rate will apply to carried interest gains arising after that date. A new income tax regime to apply to all carried interest returns from April 2026, with an effective income tax rate of 32.625% for additional rate taxpayers."

David Wood, senior planning associate: "The Chancellor’s mantra throughout was that the only way to drive economic growth is to invest in the sectors with the biggest potential for growth. From carbon capture and storage and green hydrogen to gigafactories and transport improvements, a well-oiled and functioning planning and consenting system will be critical to the government’s prospects of success. While the Chancellor’s speech didn’t get into the nuts and bolts of planning policy and infrastructure consenting reforms, the industry awaits with interest the revised NPPF (promised by the end of the year) and the forthcoming Planning and Infrastructure Bill which will follow early in the new year.

"It’s arguable that, despite the previous government talking the talk about streamlining the planning system, words weren’t matched with actions – particularly when it came to ensuring the capacity of planning authorities to drive forward approvals and facilitate the delivery of projects. So those at the coalface of the industry will welcome the proposals to hire hundreds of new planning officers to increase authorities’ capacity to deal with the flood of applications that will be needed to meet the government’s 1.5m homes target across this parliament. The Budget document says that this will be part of a £46 million investment in boosting capacity and capability in planning authorities, alongside £5m of improvements to the NSIP consenting regime."