Under the proposed new non-dom system, which was scheduled for 6 April, non-UK domiciles who have resided in the country for more than 15 of the past 20 tax years would automatically be deemed UK-domiciled.
Non-dom status for Britons who return to the UK but claim to have a permanent home abroad was also set to be removed.
The new rules were expected to affect thousands of British expats, who face significant tax bills if they returned to the UK.
The delay was announced during a parliamentary session on Tuesday, when British politicians debated amendments to the Finance Bill, legislation that ratifies any tax changes announced by the chancellor in the Autumn Statement or Spring Budget.
At 762 pages, this year’s Finance Bill was the longest on record.
Since British prime minister Theresa May called a snap election for 8 June, UK chancellor Philip Hammond has been under pressure to delay or scrap a number of key changes in the bill so that it can be approved by parliament before it is dissolved on 3 May.
Tax revenues
The non-dom overhaul was expected to net the UK Treasury an extra £995m ($1.2bn, €1.1bn), with an extra £245m coming from the removal of inheritance tax (IHT) loopholes on UK residential properties held by non doms through offshore companies.
The UK government initially announced the overhaul of tax perks for non-doms in the 2015 Budget, spearheaded by former chancellor George Osborne.
The changes were heavily criticised by some accountancy and tax firms, including RSM and Blick Rothenberg, with the former arguing that the government had provided an “impossibly short timeframe” to implement the non-dom reforms.
There were also concerns that tax changes would deter foreign wealthy individuals from coming to the UK, particularly following Britain’s decision to leave the European Union.
IHT on ‘enveloped dwellings’
The delay will also apply to proposals to close the IHT loopholes used by non-UK domiciles to purchase property in the UK via offshore shell companies.
Last August, the UK Treasury published a second consultation paper setting out plans to extend its inheritance tax (IHT) rules to cover properties held by non-domiciled residents in an offshore entity.
