Key Takeaways
- • UK private equity professionals received a record £5.4bn in carried interest and profit-related payments during the 2024-25 tax year, a 50% increase from the prior year, with associated tax receipts reaching £1.45bn according to HM Revenue & Customs data.
- • The surge in carry distributions was driven by managers accelerating profit crystallization ahead of Labour government tax increases on carried interest—rising from 28% to 32% in April 2025 and further to 34% in April 2026—creating a strong incentive to realize gains before the higher rates took effect.
- • The record carry payout occurred despite a depressed exit environment, with UK PE sales totaling approximately £42bn during the period, less than half the £91bn recorded in 2023, indicating the distribution surge reflects timing of realizations rather than robust deal activity.
- • Secondary market sales dominated UK private equity deal composition, with more than 65% of transactions representing sales to other PE firms—the highest proportion in a decade—underscoring structural challenges in the exit landscape.
- • Notable exits during the period included Advent International's sale of logistics business Evri to Apollo Global Management for £2.7bn in July 2024 and the sale of footwear brand Kurt Geiger to US retailer Steve Madden for nearly £300m in February 2025.
Summary
UK private equity partners generated a record £5.4bn in carried interest and other profit-related payments during the 2024-25 tax year, representing a 50% increase from the preceding year, according to data compiled by HM Revenue & Customs and reported by Bloomberg. The resulting tax receipts totaled £1.45bn, surpassing the previous record of £1.34bn from 2021, marking the largest recorded payout since the tax authority began collecting this data in 2017.
The exceptional increase in carry distributions was substantially driven by PE managers accelerating profit realizations ahead of anticipated tax rate increases. The Labour government, following an election campaign pledge to address what it characterized as preferential tax treatment for private equity executives, increased the capital gains tax rate applicable to carried interest to 32% from April 2025, up from the previous 28% rate, with a further increase to 34% scheduled for April 2026. This regulatory shift created a powerful incentive for managers to crystallize gains before the higher tax brackets took effect, explaining the magnitude of the 2024-25 distributions.
Notably, this record carry payout occurred within a relatively subdued exit environment. PitchBook data shows UK private equity sales totaled approximately £42bn during the period, representing less than half the £91bn recorded in 2023. This disparity underscores that the surge in carry distributions reflects the timing and acceleration of realizations by managers rather than a broad-based recovery in deal activity or exit valuations.
The composition of UK private equity exits during the period highlights structural challenges facing the industry. More than 65% of transactions involved sales to other private equity firms, the highest proportion recorded in a decade, indicating a shift away from traditional strategic buyers and IPO exits toward secondary market activity. Among significant transactions during this period, Advent International sold UK logistics business Evri to Apollo Global Management for £2.7bn in July 2024, while footwear brand Kurt Geiger was sold to US-listed retailer Steve Madden for nearly £300m in February 2025, representing some of the larger exits in an otherwise constrained market.
The exceptional increase in carry distributions was substantially driven by PE managers accelerating profit realizations ahead of anticipated tax rate increases. The Labour government, following an election campaign pledge to address what it characterized as preferential tax treatment for private equity executives, increased the capital gains tax rate applicable to carried interest to 32% from April 2025, up from the previous 28% rate, with a further increase to 34% scheduled for April 2026. This regulatory shift created a powerful incentive for managers to crystallize gains before the higher tax brackets took effect, explaining the magnitude of the 2024-25 distributions.
Notably, this record carry payout occurred within a relatively subdued exit environment. PitchBook data shows UK private equity sales totaled approximately £42bn during the period, representing less than half the £91bn recorded in 2023. This disparity underscores that the surge in carry distributions reflects the timing and acceleration of realizations by managers rather than a broad-based recovery in deal activity or exit valuations.
The composition of UK private equity exits during the period highlights structural challenges facing the industry. More than 65% of transactions involved sales to other private equity firms, the highest proportion recorded in a decade, indicating a shift away from traditional strategic buyers and IPO exits toward secondary market activity. Among significant transactions during this period, Advent International sold UK logistics business Evri to Apollo Global Management for £2.7bn in July 2024, while footwear brand Kurt Geiger was sold to US-listed retailer Steve Madden for nearly £300m in February 2025, representing some of the larger exits in an otherwise constrained market.
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