With a chance to get past the headlines and examine the specific details of the changes, advisors tell this publication what they think of the UK overhaul of the non-dom system.

This week UK finance minister - aka chancellor of the exchequer - George Osborne set out a range of measures affecting the wealth management industry, particularly a move to treat non-domiciled residents in the UK as “domiciled” if they have lived in the country for more than a certain period of time. In the recent UK general election, Labour Party leader Ed Miliband said that if elected, he would radically alter the system. Ironically, the Conservatives, who won in May, appear to have gone along with some of the criticisms of the non-dom system.

Now that some of the fine print of the measures has been studied by industry practitioners, we bring another selection of reactions about the changes to the non-dom regime.

Withers, the international law firm
The chancellor then appears to have thrown caution to the wind with far reaching changes to the remittance basis, so that resident non domiciliaries (RNDs) will be subject to taxation on the arising basis of tax after more than 15 out of 20 years of residence.

The good news is that no one will have to bother paying the £90,000 remittance basis charge after 2017, which applies after 17 out of 20 years of residence, as of course by then RNDs will be deemed domiciled for all taxes. That's a good headline, but when one looks at the detail it becomes apparent that the changes are rather less seismic than they might first appear and that there are planning opportunities which will be available between now and April 2017, when the changes are due to come into operation.

The first question is what is the rationale behind the change? We know that RNDs are major contributors to both tax receipts and the economy generally, with £8.2 billion ($12.6 billion) being the last estimate of their contribution. It seems rash when, as the chancellor reminded us, "the greatest mistake this country could make would be to think all our problems are solved", to then shake the foundations of a system that makes the UK incredibly attractive to international investors, entrepreneurs and job creators.

The move is expected to raise £385 million by 2020-21 – hardly worth it, one would think. It can only be assumed that the answer lies in the political impact rather than economics and, one assumes, a desire to ensure that this is no longer a political hot potato. As we shall see though, the changes are not necessarily as dramatic as they seem. As to why 15 years, that, we are afraid, appears to be anyone's guess.

HMRC has published a technical briefing to go alongside the announcement and the following key points stand out: both existing and future excluded property trusts remain valid planning options; indeed trusts established prior to having been resident for 15 out of 20 years will ensure income and gains realised and retained within the trust will not be taxed, even after the settlor and/or beneficiaries are deemed domiciled under the new test.

Other changes: distributions and benefits received from such trusts will however be taxed, whether remitted or not; the recently increased £90,000 remittance basis charge is somewhat of a red herring – since it kicks in only after 17 out of 20 years of residence, clearly it will fall away (although it is possible that there will be a further increase in the remittance basis charges for shorter-term residents by 2017); domicile as a matter of general law remains unaffected; the children of longer-term RNDs will not automatically become deemed domiciled when their parents do – their position will be tested on the length of their residence (bad news for UK schools maybe); longer-term deemed domiciled residents will have to remain non-resident for more than five complete tax years to break general deemed domicile – this aligns with the current requirements for capital gains and income tax residence; longer-term RNDs who have already established non-trust offshore structures – e.g. companies – will wish to review these prior to 2017.

The good news is that with planning in good time, offshore trusts will remain a good deferral and inheritance tax planning structure. The bad news is that accessing benefits will be rather unattractive. Trustees will wish to be especially mindful of the impact of the supplementary charge, which means distributions of gains which are within the structure for six or more years are charged at a 44.8 per cent rate, as it will no longer be possible to address this by distributions offshore.

Despite much speculation that hereditary non domicile status would be removed or significantly amended, there has in fact been no change at all to this. Instead, in the rather unusual scenario where a UK domiciliary acquires a domicile of choice elsewhere – e.g. through establishing a home elsewhere and deciding to settle there – and then returns for a short period to the UK, perhaps for a job posting, with the clear intention of returning to his new home, he will not be able to claim non-domicile status.

Jenny Wilson-Smith, solicitor in the private client and tax team at Boodle Hatfield
Non-doms proved to be one of the more contentious election themes earlier in the year and reform was expected. However, the depth of the proposed reform is surprising. We will look forward to seeing the scope of the consultation and will be making representations to government to ensure that the new rules are workable.

Osborne announced restrictions to restrict the fairly widespread practice of non-doms owning UK homes through an offshore company/trust structure so that they are outside the UK inheritance tax net.

To some extent the popularity of such arrangements has been eroded in recent years due to the imposition of an annual charge on properties owned in a corporate structure. The changes announced in yesterday’s Budget will abolish the IHT benefits of owning property in this way altogether which was quite unexpected and will require all affected clients to review their position and consider restructuring in advance of April 2017.

Jason Porter, director, Blevins Franks
The transferable main residence relief that applies to properties overseas as well as the UK is good news for British expats. This relief will be in addition to the existing nil rate band of £325,000, starts at £100,000 per person, and increases by £25,000 per year until in 2020/2021, when it reaches a maximum of £175,000 per person. Combined, it will create in effect a £500,000 inheritance tax threshold for individuals where their share of the main home exceeds £175,000, provided the main home passes to a direct descendent.

Any unused main residence allowance or nil rate band for each individual would be transferred to their surviving spouse or civil partner, meaning the effective inheritance tax threshold will rise to £1 million for a couple. However, where the net estate exceeds £2 million, the main home relief will be withdrawn in its entirety.

The unused allowance will apply to a property outside the UK provided it has been the main home of the deceased at some point. However, local succession tax may still apply to the property.

Nathan Hall, investment management tax partner at KPMG
The non-dom changes will affect the investment management sector given the international profile of managers and business owners in the UK. The impact of the corporation tax and dividend tax changes also needs to be assessed. Based on what happened when the 50 per cent tax rate was introduced we don’t expect significant movement of people -  broader factors such as access to talent and networks make the UK an attractive place to do business. Close attention will need to be paid to the detail, and managers will need to re-assess their structures to ensure they’re as tax efficient as they can be in light of all the changes.

James Ward, head of private client and partner, Seddons
It is clearly becoming increasingly difficult for the chancellor to identify sources of income for the Treasury, and it seems that non-doms may be this year’s political punchbag of choice.

It is imperative that the Budget appears to be balanced, with tax increases sitting alongside benefit cuts. As Osborne has now formally committed to the tax triple lock, this is one way in which the Treasury’s coffers can be topped-up. Importantly, it is also a signal to voters that reliance on budget cuts alone will not eliminate the deficit. This is, therefore, a nominal announcement in terms of economic impact, but a very significant one strategically.

It is deeply ironic that the idea of a clampdown on non-doms was introduced by the now-exiled leader of the opposition. Removing the status altogether would have been economically rash, but these initiatives will no doubt prove popular with the electorate.

Overall, this will have a major impact on wealthy overseas individuals in terms of how long they can be based in the UK or how they structure their worldwide assets. For anyone born to UK residents, the budget spells significant issues if they are also non-dom. It would seem the tax advantage will be permanently removed if they are resident in the UK.

Finally, we will watch with interest the proposed changes to inheritance tax on UK properties owned by offshore structure. Currently this has been a way to avoid UK inheritance tax when investing into the UK. If the ability to do this is removed, then investing in the UK is likely to be far less attractive. It will also take away a key business area for offshore trust companies.