The so-called ‘Mayfair loophole’ is part of the capital gains system and was agreed by the last Labour Government. It allows private equity firms to treat their profits as capital gains when there is capital at risk.

I welcome the clampdown, announced in the budget, to ensure that fund managers cannot use tax planning to avoid paying the appropriate amount of capital gains tax on “carried interest”. It is valid that the Government treats carried interest as a capital gain and not income, as it reflects the long term performance of a fund’s investments.

The Government has taken action to increase tax on private equity by raising the rate of capital gains tax from 18% to 28%. This tax increase also means that hedge fund managers no longer pay less tax than their cleaners – a situation the last Labour Government did nothing about in 13 years in office.

Moreover, the other action to tackle aggressive tax avoidance and tax evasion are being implemented; the Government has led the world on changing international tax rules and is implementing those changed in Britain. Is has gone further on tackling tax avoidance and evasion than any previous Government, closing more loopholes and raising £85 billion in compliance activity.

Additionally, the Chancellor has outlined the Government’s commitment to recoup an additional £5 billion by further clamping down on tax avoidance during this Parliament at the same rate it has for the last 5 years.