The new Chancellor of the Exchequer, Alistair Darling, has told the Guardian that the tax breaks enjoyed by private equity companies may be curtailed either in the Autumn pre-budget report or next year’s Spring budget.
Darling was cautious about his attitude to private equity, and said that he would not react to ‘day-to-day’ calls for action, but said that he wanted a fair tax system.
Acknowledging that the tax breaks used by private equity firms for LBOs, such as 10 per cent capital gains tax, had been intended to benefit entrepreneurs, Darling said the government would look at people who ‘abused’ the system.
"There are examples where private equity has brought money in and helped people restructure and carry on trading”, said Darling, “of course, the tax system has to be fair but, before you change it, you have to have regard to what the consequences will be.”
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