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Non-doms looking for ways to alleviate the tax burden arising from the new £30,000 capital gains levy must take legal advice before considering mitigation products, according to one trust management firm.

SCF Group, a provider of private interest foundations, said there is now a soaring number of residents looking at foundations in either Liechtenstein or Panama, but also noted that it is likely this loophole will be closed of before long.

Barry Spencer-Higgins, group chief executive of SCF Group, said one of the major problems with private interest foundations is that few firms have experience in advising on how to best set up these vehicles.

He said: "It is vital that non-domiciled residents who wish to take advantage of private interest foundations take proper legal advice to ensure that their vehicles are watertight. The decision to reform a tax ruling that has been in place for 200 years is very likely to have dire consequences for both the City and the rest of the UK economy."

Mr Spencer-Higgins said it is likely that the estimated capital flight resulting from the tax changes could outweigh the projected £3.5bn in additional earnings for the Treasury.

He said: "We stand to lose some of the best brains in the City, their UK investments and their income tax. Chasing these non-doms out of the capital will doubtless have an effect on the entire financial services sector, which counts for 25 per cent of the UK’s gross national product."