Private-equity may lose its tax break

SVG's Nick Ferguson, a leading private-equity player with nearly 25 years' experience, waded into the private-equity taxation argument this week - and kicked up a right storm. He told the FT that ‘Any commonsense person would say that a highly paid private equity executive paying less tax than a cleaning lady can't be right.'

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Last Updated: 31 Aug 2010
Private-equity specialists exploit a Capital Gains tax break that allows them effectively to pay just 10% on earnings. Under increasing pressure from the unions and the media to do something about this, the Government has taken the Yes, Minister route of launching two separate reviews: one into executive tax and the other into the tax treatment of equity-style debt instruments.

PM-in-waiting Gordon Brown hinted that the favourable tax conditions enjoyed by private equity practitioners could be ending. He told the GMB annual conference in Brighton this week that the Government might change to the rules later this year, with a pledge to ‘make sure there is justice and equity in the treatment of tax arrangements in that area'.

His comments were in part a riposte to Ferguson, who later revealed his bemusement at having found himself in the headlines. He also gave an impressive defence of the PE sector, telling his kids over dinner that his career had ‘not only been really worthwhile but I am also proud to have been involved'.

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