BUDGET 2015: Chancellor George Osborne has closed a loophole that allows non-doms to avoid paying inheritance tax on residential properties.
The government will also remove permanent non-dom status from those who have lived in the country for 15 of the past 20 years.
In his summer Budget speech Osborne said removing non-dom status entirely would cost the country. However, he admitted there were “fundamental unfairnesses in the system”.
Osborne believes that changes to the non-dom status will raise £1.5bn.
In his Budget, the chancellor has also introduced rules establishing that owners of UK residential property who would otherwise pay inheritance tax on that property cannot avoid paying it by holding it in an offshore structure.
Dr Anthony Lee, senior director at BNP Paribas Real Estate, said: “This move could act to further enhance demand for prime UK residential property as non-domiciled owners seek to take advantage of UK inheritance tax relief, and therefore sell property held abroad and ‘repatriate’ their assets to the UK.”
