Private equity Partners celebrate win over carried interest perk

"I'm glad I don't have to look into moving to Paris, put it that way," said one senior private equity manager from his office near Gloucester Road tube station in the wealthy London enclave of Kensington.

- Kalyeena Makortoff Anna Isaac

He was among a raft of private equity bosses nursing hangovers in some of the capital's smartest postcodes yesterday, a day after the Labour party unveiled its first budget in 14 years. "I don't often drink these days but a few of us did go out for drinks to celebrate," he chuckled.

The reason for the industry's jubilation? Labour's climbdown on its planned tax raid on carried interest - the share of profits that senior private equity bosses make after buying, turning around and selling a business.

Known colloquially in buyout land as plain "carry", it is a hugely lucrative perk that means private equity partners take home multi-million pound sums that are taxed at a far lower rate than income.

Rachel Reeves had originally pledged to raise £565m a year by cracking down on the "indefensible" tax loophole that left carried interest taxed as a capital gain at 28%. That compares with the 45% rate of income tax applied to higher earners and most City bonuses.