Budget tax break for non-doms

GEORGE OSBORNE "buried" plans in last week's Budget to offer a tax break to non-doms, according to an analysis of the red book by Labour.

In a paragraph in the middle of the treasury explanation of the Budget, the Chancellor said that he would raise the inheritance tax exemption for non-doms, the Guardian reported.

At the moment, a taxpayer domiciled in the UK can transfer their entire £325,000 inheritance tax allowance to their spouse if they are also based in Britain.

This figure is reduced to £55,000 if a UK taxpayer makes a transfer to a spouse who is not domiciled in the UK. Osborne said he would increase this figure, though he declined to set a figure, the Guardian reported.

Lord Wood of Anfield, the shadow cabinet minister who unearthed the change, told the Guardian: "This was a budget that raised tax on pensioners and made millions of hard-working families pay more. But buried in the millionaires' budget is a measure which gives non-doms a tax break. People will be baffled that in these harsh economic times, the Tories think it is a priority to give more tax advantages to non-dom couples who include some of the wealthiest people in the world."

It is understood that the change is being introduced by the Treasury to avoid a legal challenge from the EU, the Guardian reported. The Treasury has been advised that the change is necessary to allow EU citizens to transfer their allowance to spouses registered for tax purposes in different EU member states.