Non-doms must pay £30,000 to stay here

Alistair Darling announced that the £30,000 annual levy would not be fiddled with for the rest of this Parliament - effectively until 2010.

The move was meant to reassure the City with a pledge of stability after months of uncertainty, but business is sure to react badly to the refusal to scrap the new tax altogether.

Mr Darling confirmed a previous announcement that he would not tax the offshore income or assets of "non doms" - foreigners living in the UK but not registered for British taxes. He is also hoping that American expats will not be taxed twice for the annual levy.

But he made clear that he would not make any further changes to the tax, which is imposed on anyone who has lived here for more than seven years.

Mr Darling was pressing ahead with his charge, although with the promise that thousands of Americans working in Britain will not be double-taxed. A deal is being struck to allow them to offset the charge against US taxes.

Another concession will be made to tax exiles who commute from Monaco to London. New residency rules will count the number of "midnights" they spend here instead of a tougher proposal to count days spent travelling in and out. That makes it easier for the exiles to avoid British tax. Mr Darling's announcement-came amid fresh warnings from an expert today that "non doms" may still quit Britain in protest at the £30,000 levy.

The warning came from John Cullinane of the Chartered Institute of Taxation. He welcomed the moves but added: "For a billionaire from overseas, the £30,000 was never the problem but the damage was done by the way it was announced.

"It will certainly make a difference to other categories, such as academics from the United States. My hunch is that the Government will get away lightly but a lot of people are still talking about going."

There are 115,000 people registered as non-domiciled for taxation in Britain, mainly working in financial services. They pay no tax on income or capital gains earned outside the UK. They range from billionaires attracted to live here by the arrangement, to migrant workers on low to average incomes.

The Chancellor announced in the autumn that he would charge the levy on non-doms who have been here seven years or more. The Treasury also declared it would tighten up other aspects of foreign taxation, including a clampdown on tycoons bringing in money from offshore bank accounts without paying tax.

The Treasury thinks only about 4,000 people will end up paying the £30,000 . But London's rivals have been eagerly trying to lure the super-wealthy away.