what it means and how the rules are changing

According to the Office for Budget Responsibility’s analysis published alongside the Budget, 10pc to 20pc of current non-doms will leave the UK because of the tax changes.

The forecaster warned that the tax taken from the new regime was “highly uncertain” because of the difficulty in predicting how non-doms would react to the reforms.

According to HMRC, only 55,200 taxpayers claimed to be non-domiciled in 2022, representing 0.08pc of the UK population.

Of these, 37,000 non-doms claiming the “remittance basis” paid over £6bn in tax in 2020-21.

What is Labour proposing?

In announcing the non-dom policy overhaul, Jeremy Hunt seemingly stole Labour’s thunder as abolishing non-dom status was a key Labour pledge.

However, Labour plans to go a step further and make sweeping “full fat” changes rather than the “semi-skimmed” version pledged by the Tories. 

Labour will stop current non-doms from being able to move their money into an offshore trust before the ban comes into place in April next year, which could shield them from inheritance tax.

The party would also remove the planned 50pc discount on the amount non-doms have to pay in tax in the first year of the new ban.

The money raised will pay for commitments made on improving the health service and providing free primary school breakfasts for children. The inheritance tax raid is estimated to raise £430m a year, and the savings for the tax avoidance crackdown are estimated to start at £700m a year and rise to £5bn a year within five years.

Rachel Reeves, the shadow chancellor, said: “We will take on the tax-dodgers, because if you make your home and do your business in Britain then you should pay your taxes here too.

“The plan we are announcing will give HMRC the resource it needs to go after those who are avoiding or evading tax, and to modernise the tax office so we have a system that is fit for purpose.”

Conservatives, and other critics, have questioned whether so much money could be raised by targeting tax avoidance, saying Tory governments had announced 200 measures with that focus since 2010.

Basil Dixon, partner at legal firm Payne Hicks Beach, said: “In contrast to the pejorative language used by the shadow Chancellor, the vast majority of individuals who are taxed under the current regime for non-doms simply want to follow the law and to be able to plan properly and appropriately.”