FirstFT: Top UK dealmakers’ £5bn haul renews debate over carried interest tax

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Good morning. A group of 3,000 private equity dealmakers shared an annual carried interest windfall of about £5bn in the 2022 tax year, highlighting the large sums at stake in the UK debate over how these payouts should be taxed.

The figure, disclosed in a Treasury analysis of Labour party policy, shows the gains made during what was a lucrative year for the private equity industry, thanks in part to buoyant stock markets.

Most of these taxpayers “have high levels of income and gains, and can be highly mobile”, according to the report, based on UK tax authority data for the 2021-22 year.

The haul compared with £3.4bn that a group of 2,550 UK taxpaying dealmakers declared for the previous tax year, according to the same analysis, which was published in February.

So-called carried interest — the cut of gains private equity investors make on successful deals — has come under increasing scrutiny in the UK, especially with a potential Labour government. Here’s why.

And here’s what else I’m keeping tabs on today:

Economic data: S&P Global publishes its manufacturing purchasing managers’ indices for the eurozone, UK, France, Germany and Italy, while Germany releases its preliminary consumer price index for March.
China-Taiwan relations: Former Taiwanese president Ma Ying-jeou is in China on an 11-day “trip of peace” where he is expected to meet Chinese President Xi Jinping.

Five more top stories

1. Exclusive: The US and UK have signed a landmark agreement on artificial intelligence safety, making them the first countries to formally co-operate on how to test and assess risks from emerging AI models. The deal was signed yesterday in Washington by UK science minister Michelle Donelan and US commerce secretary Gina Raimondo. Here’s more on the world’s first such bilateral deal.

More on AI: A surge in demand for electricity to feed data centres and power an AI revolution will usher in a golden era for natural gas, fossil fuel executives said.

2. Iran has accused Israel of killing three senior members of its Revolutionary Guards in an air strike on Tehran’s embassy in Damascus. The attack yesterday killed Brigadier General Mohammad-Reza Zahedi, a prominent commander, marking a significant escalation in regional hostilities. Israel, which rarely confirms or denies strikes against targets linked to Iran, did not comment. Here are more details on the strike.

Israel-Hamas war: Israeli forces withdrew from Gaza’s al-Shifa hospital yesterday after a major two-week operation that destroyed much of the strip’s largest medical facility.
Al Jazeera: Prime Minister Benjamin Netanyahu has vowed to close the news channel in Israel after the Knesset passed a law granting him powers to shut down foreign networks deemed a “security risk”.
Peace activists: Israelis seeking coexistence with Palestinians are facing abuse and even arrest in a society largely united by the fight against Hamas.

3. Exclusive: Deloitte has taken on extra office space in central London less than two years after making cutbacks, people familiar with the details told the Financial Times. The Big Four firm took on about 70,000 sq ft of space near its New Street Square headquarters in February, increasing the size of its central London estate by almost a fifth. Here’s why the firm is reversing cuts it made during the pandemic.

4. The Asian Infrastructure Investment Bank is in talks to provide a second loan guarantee deal to the World Bank, a move that would deepen the lenders’ partnership and allow the Washington-based institution to increase lending. The Beijing-based AIIB is also in talks with the Asian Development Bank and Inter-American Development Bank about similar projects, its president told the FT. Joe Leahy has more details.

5. Exclusive: Crispin Odey is being considered for membership by the exclusive Mayfair gentleman’s club Buck’s. The disgraced financier’s eponymous hedge fund firm unravelled last year after the FT detailed multiple allegations of sexual assault or harassment against him over decades. Members told the FT that Odey’s prospective membership had caused uproar among existing members at Buck’s.

The Big Read

A montage of Donald Trump flanked by red and black circles, with images of his campaign rallies in the background — © FT montage/AP/Getty

Donald Trump is ahead in most polls for November’s election, but in terms of finances, he is lagging far behind President Joe Biden, whose campaign has raised twice as much. That is because the former president’s 2024 campaign is unlike any other: money comes in, but just as quickly, some goes straight out to protect him from jail. In 2020, Biden vastly outraised Trump and became the first presidential candidate in US history to raise more than $1bn from donors. The 2024 rematch could prove even costlier.

We’re also reading . . .

Labour and Thatcher: The memory of the former Conservative prime minister has become an unlikely weapon for the opposition party seeking to broaden its appeal.
Paperless problem: Digital technology has proven fantastic for the sharing of information but far less useful in preserving it for archival or public use, writes Stephen Bush.
European equities: Markets have been slow to adjust to early signs of economic recovery in Europe, writes JPMorgan Asset Management’s Karen Ward, and investors should take advantage of valuations before the tide turns.
Minimum wage: Increases to minimum rates have lifted living standards but prompted unwelcome trade-offs for employers amid demands to boost pay.

Chart of the day

Solar panels are getting so cheap that “we’re just putting them everywhere”, one analyst said. Indeed, people in the Netherlands and Germany are using them to build garden fences, where they capture less sunlight but are less expensive than installing them on roofs, as a boom in Chinese production saturates the global market.

Line chart of Price in $ per watt showing The price of solar panels is at an all-time low

Take a break from the news

Nearly 17 years after the last Harry Potter book, the boy wizard is still enticing visitors to the UK — even to places with no obvious connections to the books or films.