This shouldn't be a surprise to anyone who has been following the private equity story in the UK. Chancellor Alistair Darling announced in the Pre-Budget report today that the taxation of private equity income would be changed. Basically the CGT on their investment income is going up from 10% to 18%, so it's not even the worst possible outcome for them.
Solid campaigning from the unions, and some woefully inept responses from the industry itself, combined with the buyout boom running out of steam made the Masters of the Universe an easy, and popular, target for the Government. Maybe now, when they've lost the battle, the industry might reflect that when you are unpopular, threatening to leave the country if you don't get your own way is a rather weak card to play. It will be interesting to see if any provate equity execs do actually relocate given the song and dance the industry's trade body, the BVCA, made about the issue.
Some are arguing however that the tax change will also hit genuine entrepreneurs and business angels. See this bit in the FT, and Robert Peston's blog on the Beeb site.
And what about inheritance tax and non-doms? I have to be honest and say I have no strong feelings on IHT as an issue, so in purely political terms Labour has probably undone some of the damage inflicted by the non-election. Any promised further Tory "reform" of IHT would now clearly benefit only the very well-off. In addition they will have to adjust their spending plans to take account of the fact that Darling has just spent much of the money they expected to save by targeting non-doms.
There's a positive response to the PBR from the TUC (which lobbied over bother PE taxation and the non-dom issue) here.