The Treasury disbanded a unit tasked with offshore and non-dom tax policy weeks before announcing significant changes in the budget to the way foreign residents are taxed, sources have said.

The unit, which comprised technical experts on offshore tax issues, included specialists on non-dom policy. These officials would, according. to the sources, have been expected to help manage the implementation of a replacement for non-dom status as outlined by the chancellor this week.

It is understood officials fear the Treasury is ill-prepared for an onslaught of lobbying from the wealth advisory industry, which is already seeking to overturn or shift the abolition of the tax break.

One City law firm that specialises in advising clients with complex offshore tax affairs, told staff they expected a rush to “safeguard” benefits of the status – such as creating offshore trusts while claiming the status in order to avoid UK inheritance tax – before changes are put in place, according to an internal memo.

A second law firm told staff advising on offshore matters not to book leave for the first three months of 2025. Jeremy Hunt said non-domicile status and the tax breaks linked to it would be abolished from April 2025.

Under the regime, residents with links to another country who claim they plan to eventually leave the UK can avoid tax on any income and gains from assets held outside Britain.

But they must still pay tax on any income they receive in the UK. The tax break, a legacy of colonial times, has saved some of the country’s wealthiest individuals millions in tax.

The rules on who can claim to be non-domiciled are relatively vague. A ready reckoner used by HMRC is often whether or not someone’s father was born overseas.

Tax experts have long argued the break means high net-worth individuals are in effect incentivised not to onshore their wealth.

Non-doms have to stop using the status for income tax purposes after they have been resident for more than 15 of the past 20 years. It is optional, and has to be proactively claimed by an individual on a so-called remittance basis.

Those wanting the breaks must pay an annual fee of £30,000 if they have lived in the UK for seven of the past nine tax years, rising to £60,000 a year if they have lived in the country for 12 of the past 14 years.

Some non-dom tax breaks will survive the overhaul. For example, those currently claiming the status will be able to avoid UK inheritance tax by putting their overseas assets in a trust. This can be an extremely valuable boon that outlasts short term income-based wins.

After publication, a Treasury spokesperson declined to discuss any movement of experts at the department but said there was no such formal unit, and it had therefore not been disbanded.

A spokesperson said: “The new simpler, more modern, regime will commence on 6 April 2025.”

• This article was amended on 11 March 2024 to reflect a statement by HM Treasury received after publication.