People born before 1967 urged to flee UK before April to use tax 'loophole'

UK households born before 1967 are fleeing the UK to escape a inheritance tax raid from the new Labour Party government and HMRC. A surge of wealthy older people is preparing to leave Britain before April to take advantage of an inheritance tax loophole introduced in last month's Autumn Statement.

Tax advisers said they had clients who were planning to move overseas 'almost straight away' as a result of an IHT exemption that has been opened up by Labour's chances to non-dom rules. "[The rules are] basically saying if you want to go, you have to go this tax year"' Philip Munro, partner at law firm Withers, told the Financial Times, adding that the new provision had 'crystallised' many non-doms' decision to leave Britain.

Edward Hayes, director at London law firm Burges Salmon, said the rule change from Rachel Reeves meant "a lot of clients are in the position where they either leave almost straight away... or stay longer and face the maximum 10-year [wait] when they go in the future".

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Maxwell Marlow, of the Adam Smith Institute, said: "The abolition of the non-dom regime will drive away highly mobile wealth creators and so their tax contribution will decrease and they will invest less in our economy."

Nigel Green, chief executive of financial advisory firm deVere Group, warned the exodus will leave 'lasting scars on Britain's economy'. He added: "The UK has long benefited from the economic contributions of non-doms, whose direct and indirect investments and business activities have been integral to the nation's prosperity.

"The allure of the non-dom tax status has been a pivotal factor in attracting international talent and creating a dynamic business environment. Its removal is likely to signal a shift in the global perception of the UK as a favourable destination for wealth creation and business development."

An HM Treasury spokesperson said: "Replacing the outdated non-dom tax regime with a new internationally competitive new residence-based system addresses unfairness in our tax system, attracts the best talent and investment to the UK, and ensures everyone who is a long-term resident in the UK pays their taxes here.

"This was a once-in-a-Parliament Budget to wipe the slate clean, and our package of changes to this regime in the Autumn Budget is forecast to raise £12.7 billion over the next five years to help fill the £22 billion fiscal hole and rebuild our public services."