Yesterday, the Government announced that the CGT rates for carried interest arising on or after 6 April 2025 will increase to 32%, in line with the 4% increase to the higher rate of CGT which took effect immediately.  That is just an interim measure however, and, from April 2026, a new regime will be introduced which will bring all carried interest within the scope of income tax. Importantly, the new regime will provide a lower effective tax rate of 32.625% for additional rate taxpayers (plus NICs) for certain “qualifying” carried interest. Details of the new regime were published by the Government, including a consultation, closing on 31 January 2025, requesting views on how to define what conditions should be introduced to access the lower effective tax rate. The shape of the new regime is not yet fully settled, and fund managers will need to monitor closely and, indeed, consider whether they want to respond to the consultation.  That said, it appears that, broadly speaking, the design of the new regime will more closely align the UK’s carried interest rules with regimes in some other European countries.