As part of yesterday’s Budget announcement, George Osborne revealed that anyone born in Britain to UK-domiciled parents, or anyone who has lived in the country for more than 15 of the last 20 years, will have to pay full tax in the UK.
The non-domicile loophole has been a much-debated tax rule over recent years, and it was controversial because it allowed thousands of wealthy families to live in Britain without being required to pay tax on their overseas income.
Chancellor George Osborne said: “British people should pay British taxes in Britain – and now they will.”
“It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.”
The new rules will take effect in April 2017 and it is expected to raise an additional £1.5bn for the Government during this parliament.
Approximately 114,000 UK residents benefit from non-dom status, meaning that they are only required to pay tax on earnings in the UK.
Following the rule change, it will mean that wealthy residents owning assets in the UK, such as property or art, through offshore companies, will be taxed on any increases in their value.
Within two years, inheritance tax will also be payable on UK residential property owned by non-domiciles.
As part of a widespread campaign to eliminate tax cheating, HMRC will be given extra money to investigate wealthy individuals, as well as corporations, and their financial affairs.
The Treasury has predicted that anti-avoidance and anti-evasion measures will help raise an additional £3.4 billion a year by 2020.