"Recognising the contribution of many of these individuals to our economy, we will put in place transitional arrangements for those benefiting from the current regime.
"That will include a two year period in which individuals will be encouraged to bring wealth overseas to the UK where it can be spent and invested here.
"A measure that will attract onshore an additional 15 billion pounds of foreign income and generate more than a billion pounds of extra tax overall abolishing non DOM status will raise 2.7 million pounds a year.
"That is money to plan to use for spending. But today the Conservative government makes a different choice. Use that revenue to help cut taxes on working families."
James Quarmby, partner and head of private wealth at international law firm Stephenson Harwood, said in earlier reaction on LinkedIn: "We were expecting an Italian Job, but instead we got a horrible shock.
"The Chancellor is completely abolishing the non dom regime from April 2025 and replacing it with a transitional residents (TR) regime, which looks like a direct copy of the New Zealand TR regime. This means 4 years of exemption for foreign profits and then you are taxed worldwide.
"As predicted, the remittance basis is dead - even old unremitted income/gains can now be remitted, albeit at a much lower rate of tax.
"They haven’t worked out what to do with IHT but in the meantime we have a promise that if you set up an offshore trust before April 2025 then it will be safe for IHT. Thanks Jeremy, that has sorted out my work stream for the next 12 months!"
Christopher Groves, partner and co-head of the private client and tax team in Europe said: "The Chancellor's announcement today of a simpler regime for non-doms is attractive rhetoric, but represents a missed opportunity in terms of making the UK a genuinely attractive place for international wealth creators by failing to make the rules simpler and more competitive with other countries.
"With the new rules proposed to take effect from 2025, the real question is whether these rules will actually take effect.
Also addressing the inheritance tax changes, Groves said: "The proposed changes to the basis on which inheritance tax is levied have the potential to be very far reaching and represent a dramatic departure from the current regime. This will no doubt cause many long-term UK residents to reassess whether it remains practical for them to live in the UK."
Gianpaolo Mantini, chartered financial planner at Saltus, said: “This is a useful first step and removes some of Labour’s options whilst tackling a political weak spot for the Tories. Whether this will actually generate significant additional income for the Treasury is highly debateable. It provides a window for those to whom it applies to restructure their assets to mitigate these measures in a timely manner.”
James Ward, head of private client at Kingsley Napley LLP, said: “Today’s budget saw Jeremy Hunt steal Labour's thunder with a move on wealthy non-doms by reducing the number of years they can spend in the UK before paying tax on their worldwide assets from 15 years to 4 years.
"He also is looking to attack offshore trusts and the protection they provide against arising income and capital gains tax. While it is understandable to make long-term UK residents pay tax on their worldwide assets, 4 years is hardly anytime at all, especially as other countries still offer far more generous schemes. So do not be at all surprised if we see even more non-doms leaving the UK and fewer wealthy individuals choosing the UK as a destination of choice.”
GSB Wealth Partner, Mauro De Santis Bo said: "The abolishment of the non-domicile status will directly impact some of GSB's clients, as we work with international families moving around the globe. Some of our clients are UK non-domicile and are currently living in the UK.
"We personally have some non-doms living in the UK who will likely reconsider whether to remain residents after the recent changes. Our job is to explain the changes in the recent budget, how these will impact their current situation, and the options available.
"Wealthy non-doms who have the right level of advice will most likely find different ways to mitigate the impact of the new residency-based system and remain UK residents, but some families will prefer to leave the country and seek a new home that offers better tax treatment.
"It will be interesting to see how this new residency system will play with the current rules for Inheritance Tax. If no further clarity is given, this change could potentially lead to some inheritance tax headaches for those non-doms (which will now fall under the new ‘modern, simple and fairer residency-based system’) living in the UK."
Some of the main points:
1. Where individuals have been non-UK resident for more than 10 years, on becoming UK tax resident one can enjoy full tax relief for four years on non-UK source income and gains, including bringing that income or gains into the UK without any tax. Thereafter, one would be taxed in the same manner as any UK tax resident.
2. Individuals currently claiming the remittance basis may face material changes to how they are taxed but this could bring simplicity as well as the ability to remit foreign income and gains to the UK under preferential tax rates at 12%.
3. Trusts settled by non-doms pre April 2025 - this will continue to provide UK IHT protection and could be an opportunity for families.
4. Trusts, where settlors are UK resident and can benefit from the trust, will face a change in that income gains in the trust will become liable to income tax and CGT as it arises in the trust (and after the four-year period mentioned above).
Nigel Green, deVere Group CEO said: “The non-dom tax status has long been a cornerstone of the UK’s appeal to global high-net-worth individuals and their families, offering a unique tax arrangement that allows foreign residents to mitigate their tax liabilities.
“However, the imminent removal of this tax privilege is expected to prompt a significant number of non-domiciled individuals to reassess their residency choices.
“These individuals are internationally-mobile. This will inevitably prompt many of those affected to simply move to more attractive, lower-tax jurisdictions, such as Dubai, Switzerland and Singapore.”
"These global low-tax jurisdictions offer more than just favourable tax policies; they provide a comprehensive ecosystem that supports business growth and wealth preservation. The influx of affluent individuals into these regions can be expected “to catalyse economic development, attracting new investments and boosting a vibrant entrepreneurial, pro-business spirit.”
