It appeared to be a political masterstroke. A cut in inheritance tax would be popular. But how might it be funded? The party faithful applauded as they were told the targets would be “nondoms” – those with their roots outside Britain but living here, the yacht-owning super-rich of popular imagination who could well afford to be squeezed for a few quid.

A levy on them would be “easy to administer, difficult to avoid and strikes the right balance between a fair tax system and a competitive economy”, the party conference heard.

And who was the speaker? None other than George Osborne, shadow chancellor, addressing the Tories in Black-pool last September.

Labour rubbished Osborne’s ideas: his arithmetic didn’t stack up, they said. But within less than two weeks, chancellor Alastair Darling was standing at the Commons dispatch box to deliver his prebudget report. And he shamelessly copied the Tory idea of a nondoms levy: if these people wanted to shelter their overseas earnings, they would have to pay £30,000 a year to do so.

How Darling must now rue his eagerness to poach that Tory idea. The chancellor’s proposals have provoked a wave of protest – and not only from nondoms, most of whom have been reluctant to put their heads above the parapet.

Accountants and lawyers branded the proposed regime unworkable. Above all, public figures – ranging far beyond the usual Labour-bashing suspects – warned that Darling’s plans could have terrible consequences for the British economy, the property market and even for the state of our art galleries.

In particular, say Darling’s critics, the suggested nondom tax could have a disastrous effect on the City, which has established itself as a leading financial marketplace, arguably the leading financial marketplace. In part, that has come about by attracting the brightest and best from around the world. Investment bankers are geographically mobile and can easily shift themselves, their families and their businesses to other parts of the globe.

Is Britain’s generous tax treatment of nondoms the only reason for the City’s boom of recent years? No. But it has helped.

John Treadwell, managing director of the Association of Foreign Banks, said: “Many nondoms are members of the foreign banking community in London and pay tax on their UK earnings, stamp duty on property and share purchases, and, of course, Vat.

“London is a global financial centre, not a domestic one, and needs the foreign banking community. It needs an appropriate fiscal infrastructure that recognises this position.”

Baroness Jo Valentine, chief executive of London First, said: “My main worry is that people are having to do a lot of tax planning very urgently, whereas it ought to be done over three or even five years.”

The Lord Mayor of London, David Lewis, told The Sunday Times: “I meet City businessmen of all sorts. I have up to eight meetings a day and, at the moment, five or six of these people mention the credit crunch but nondom tax changes comes up at every single one. Potentially this is very bad news for the City. People are worried that it isn’t just £30,000 if you have been here seven years – and it’s £60,000 if you are married – but the goalposts could move again. How does anyone know that it won’t become £100,000 after three years? People are worried about the unknown.”

American-born David Giam-paolo of Pi Capital, has lived here 20 years. He said: “Name by name I know people who will go. There will be an exodus. It won’t be a mass exodus. But does London think it is going to retain its preeminent status? It doesn’t take a big number to move the needle.

“The change will end up capturing and penalising the people who it wasn’t intended to catch. The oligarchs and super-rich are too clever, too rich and too mobile to get caught.”

A Canadian nondom running a property and leisure company in Britain said: “In the locker room of my gym in Chelsea – if that is a barometer for these things – they are all talking about this. There is even one guy who is thinking of going back to France – I mean, France?”

PREDICTABLE enough? Perhaps. But less predictable warnings have come from people who have been close to Gordon Brown and Labour. One such figure, Paul Myners, has seen Andy Burnham, former chief secretary to the Treasury and now culture secretary, to raise his concerns. Myners said: “There is a real danger that we will take a decision that is economically damaging.

“London has undoubtedly benefited hugely from our strength as a global banking and hedge-fund centre; it owes those industries a tremendous amount.”

His fears extend beyond the potential impact on the City. He is a trustee of the Tate and afraid that proposed rules on importing works of art could hit galleries. “Nondoms have been among the most generous supporters of our acquisitions and investment,” said Myners. “Many nondoms have lent us art. Anything that deters them from doing this in the future is a concern.” The new rules may be exactly that – a deterrent, because there may be a tax change for bringing an art work into the country.

Even Lord (Digby) Jones, the trade investment minister appointed by Brown, conceded last week that the changes might tarnish the UK’s “badge as the place to come and bring your skill and work hard”.

Darling, it seems, faces a solid wall of opposition. It is the £30,000 levy that has hit the headlines. Certainly, for a nondom married couple, paying £60,000 a year is unwelcome. On top of that, they lose their personal tax allowances.

But scratch the surface of Darling’s proposals and it is clear that some of his other measures – disclosed only when draft legislation was published last month – could be far harder for nondoms to swallow.

First, Darling plans to tighten the rules on offshore trusts: in essence, they will become as transparent and taxable as those used by ordinary UK residents. This has major implications for any nondom with a British property held through an offshore vehicle. At the moment, when a nondom’s offshore vehicle sells a property, UK capital gains tax is not paid. But if Darling gets his way, come April 6, any gain will be taxed at 18%.

“For people who have seen the value of their house go up, it’s a no-brainer,” said James Quarmby of the law firm Thomas Eggar. “The reaction of my clients has been to decide to liquidate their property holdings and/or leave. And surely, it’s the wrong time to be encouraging people to be selling their UK property. People said they could handle the £30,000. But this is a step too far.”

Complicated rules are also being introduced on bringing capital into the UK. If the Inland Revenue can show that a nondom is leaving income offshore but capital is being brought into Britain, then tax would be payable.

Few have picked up on that point. But the CBI’s deputy director-general John Cridland said: “The headline £30,000 fee is a red herring. Only a closer look at all the small print of these changes makes the position clear.” SO will many of the 120,000 nondoms in Britain flee? Nobody can give a sensible estimate. The Treasury guessed that 3,000 would go. A survey of accountants, lawyers and bankers suggested that more than 2,700 ultra-rich clients – those claiming to have a total of £45 billion invested in the UK – were considering leaving or selling assets.

But if they do leave, where would they go?

There are plenty of options for the committed tax-avoider. One financial-services player said: “From a City perspective, where can the people and associated businesses go? Gibraltar – hell. Monaco – hell. Bermuda – damp hell. But they can, and will, go to Switzerland, which has seen a slow erosion of its financial-services industry over the past 15 years, and has substantially liberalised its banking regulations – for example, making it not only possible, but much easier, to open hedge-fund management companies there.”

Certainly, Switzerland is the name most frequently mentioned as a beneficiary of any big exodus of nondoms from London.

Unconfirmed reports suggest Geneva’s inward investment office has been doing a round of roadshows and cold-calling nondoms to entice them to move. Its officials failed to return our calls this weekend.

But moving a financial-serv-ices business to Switzerland is not necessarily as attractive as it first appears. The Swiss authorities offer a “forfait” system under which people agree a lump-sum annual payment – typically of about 100,000 Swiss francs (£46,000). Nothing further is payable on income from wherever it comes.

But the person striking the forfeit deal cannot then set up a business in Switzerland. “The exception is that you could have a small business that managed family money,” said Leonie Kerswill of Price Water-house Coopers.

The system would leave open the option of living in Switzerland and visiting, say, London for a limited number of days a year to be involved in a UK company. That individual could escape UK tax and pay only the amount negotiated under the forfait deal.

So is there evidence of nondoms scuttling to the Alps?

Philippe Cardis, principal with de Rham-Sotheby’s International Realty, one of the top luxury estate agents in Switzerland, told The Sunday Times that demand from people considering relocating from Britain had soared in the past two months. Enquiries for properties worth £500,000 to £2m or as much as £3m had doubled, he said. At least three or four of the 10 top customers had mentioned the UK tax changes as the reason for their interest.

People arguing against the new nondom rules also say that the looming exodus from Britain has been reflected in demand for places at Swiss schools.

But these appear unfounded.

The Sunday Times contacted the Geneva English school, the International School, and top boarding schools La Rosey and Aiglon. Admissions tutors said they had not seen any increase in enquiries from Britain.

Not everyone thinks that the nondom tax changes are a problem. Richard Murphy, tax campaigner at Tax Research UK, said: “You must be really sad if you want to live in Geneva – the only city in the western world in which everything shuts at 5.30pm.”

The Society of Trust & Practitioners has said a survey of member firms showed that 4.5% of clients had said they were definitely leaving Britain. “That means 95.5% are probably staying,” said Murphy.

GUIDE TO NONDOMS

Who are the nondoms? People born overseas or with foreign parentage. Some hold UK passports.

What advantage does this status give? At the moment nondoms do not have to pay tax on income that arises overseas if they keep it outside Britain.

Will all these people be forced to pay the £30,000 levy? No. They can choose to pay the charge and still be classed as nondoms. Or they can opt to be taxed as any ordinary British citizen – but they would have to pay tax on overseas earnings that remain offshore – just like ordinary taxpayers.

Will people choosing nondom status have to pay the levy as soon as they arrive in Britain? No. The charge will apply only to people who have lived in the UK for at least seven of the previous nine tax years.

Will it affect my Polish plumber? Only if he has substantial income abroad. If this is less than £1,000, he won’t need to worry.

For the rich, £30,000 doesn’t sound like much. No. But new rules mean nondoms may face a tax bill when they bring money into the country. Rules on the taxation of offshore trusts are also being tightened up.

What about people counted as nonresident? Anyone who visits Britain for 183 days or more each year is deemed to be resident: they pay UK tax. But days of travel in or out are currently not counted; in future they will be.

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