Measure
From the 2022/23 tax year onwards, carried interest may be taxed on the accruals basis if a voluntary and irrevocable election is made. Legislation in Spring Finance Bill 2023 will include a calculation for the taxable accrued carried interest where such an election has been made. The intention is to enable alignment of the UK tax point for carried interest with that in other jurisdictions to alleviate timing issues for double tax relief claims.
This election will be of relevance to individuals who receive carried interest and are currently ineligible to claim double taxation relief due to mismatches between the UK tax year end and the tax year end of other jurisdictions in which foreign taxes have been paid.
The change will apply with immediate effect from Royal Assent being given to the Spring Finance Bill 2023. It will be possible to make elections with effect from the 2022/23 tax year onwards.
The opportunity to be able to claim double taxation relief which would otherwise have been unavailable due to technicalities associated with the UK’s tax year end differing from that of other jurisdictions will be welcomed by affected taxpayers.