The following Tax guidance note Produced in partnership with Emily Clark provides comprehensive and up to date legal information covering:
This Practice Note:
illustrates the partnership structure of a typical onshore limited partnership fund
explains what carried interest is, and
describes the tax treatment which applies when an employee acquires carried interest in a private equity fund
the application of the employment-related securities rules to carried interest, and
the PAYE and national insurance contributions consequences that arise in respect of a carried interest holding
For a discussion of the tax treatment of carried interest returns, see Practice Note: Taxation of carried interest holders in a private equity fund For details of the tax issues to be considered and addressed when structuring a private equity fund generally, including a diagram of a typical onshore limited partnership private equity fund structure, see Practice Note: Taxation of private equity funds—how is a fund structured?
Since 6 April 2017, limited partnerships that are also collective investment schemes can be designated as private fund limited partnerships (PFLPs). PFLPs are subject to less strict requirements under UK limited partnership legislation, including a list of activities that limited partners can undertake without losing limited liability status, no requirement for limited partners to make a capital contribution, and reduced administrative requirements. For more information on PFLPs, see Practice Note: The nature of a limited partnership and its legal framework and News Analysis: Proposed changes to the UK limited partnership framework.
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