The U.K.’s new Labour government issued its first budget at the end of October 2024, announcing very significant reforms to the tax treatment of carried interest. There had been much talk on the campaign trail of closing the PE “tax loophole” and imposing full income tax rates on the industry. Once settled into power, however, the administration’s tone became more measured. The recent budget proposals would leave carried interest with a distinct tax treatment in the U.K. and keep the U.K. broadly competitive with other major PE locations. There are, however, a lot of details to be worked out with His Majesty’s Treasury, and the U.K. PE industry will be keen to secure the best possible legislative outcome by taking part in the formal consultation that is running until January 31, 2025. In a guest article, Sidley Austin partner Oliver Currall describes operative provisions of the U.K. government’s proposed carried interest reforms; specific concerns the proposal raises for PE sponsors and their respective funds; and potential ramifications for PE senior executives that currently work in the U.K. or anticipate doing so in the future. See “U.K. Treasury Outlines Potential Changes to Make Funds Regime More Attractive” (Jun. 28, 2022).