Osborne delights Tories with tax pledges

Wealthy foreigners living in Britain and paying little tax were on Monday targeted by the Conservatives to fund a £3.5bn pre-election vow to slash inheritance tax and help first-time buyers.

George Osborne, shadow chancellor, put non-domiciled residents on notice that their tax status will be a key part of the Tory election campaign, which many believe could start in days.

Mr Osborne delighted activists at the Tory conference in Blackpool with a scheme transferring money from foreign passport holders to “aspirational” Britons, who want to buy a home or pass on assets to their children.

The move was condemned by Labour, which claimed Mr Osborne’s plan would raise only £650m and that nurses, doctors and junior City workers would be among those hit by the proposed “offshore domicile levy”.

Mr Osborne’s plan is for a flat rate levy of £25,000 to be charged on what he estimates to be 150,000 UK residents of foreign origin tax-domiciled offshore. He said the levy would lift uncertainty hanging over “non-doms” – whose status has been under review by the Treasury for five years – and safeguard Britain’s attractiveness as a place for wealthy foreigners to live.

The £3.5bn Mr Osborne hopes to raise would fund reforms to stamp duty, so that first-time buyers would be exempt on house purchases up to £250,000.

It would also pay for the abolition of inheritance tax on estates valued at less than £1m – a threshold that takes into account the rise in house prices, particularly in marginal seats in south-east England.