Experts are claiming that the Chancellor of the Exchequer, Rachel Reeves, has created a tax break for wealthy former non-doms. If you are inheritance tax planning in Oswestry or Cheshire, the cap on IHT paid by offshore trusts might benefit anyone concerned with over £83 million in assets.
This is because inheritance tax bills were reduced for former non-doms, who forfeited their status in 2024. In that Budget, those trusts were harmonised in the same regime as ordinary taxpayers, who are liable for 6% of the overall value of an offshore trust every 10 years from inception onwards. In this year’s announcement, a £5 million cap was introduced on the amount of IHT which can be levied. This specifically concerns tax payable on trust-based global wealth.
Some experts have said this change will cost the Treasury around £30 million, although the figure could be higher given that the value of some trusts amounts to hundreds of millions. The question is how many high-net-worth individuals have already left the UK following the changes to non-dom status and whose trusts are no longer within sight of the British taxman. It is those who opted to remain who will be the beneficiaries of this giveaway.
The Treasury said it hoped the cap will motivate the wealthy to stay in the UK and continue to contribute to the economy. OBR estimates have revealed that eliminating the core benefits of non-dom status will bring in approximately £117 million per annum by 2030, although this figure remains open to debate.
