The once-popular practice of taking out interest-only mortgages offshore to purchase UK properties is losing its appeal for foreigners who have lived in this country for seven or more years, accountants say.

Interest-only mortgages will be counted as income remitted into the UK according to the new taxation code for non-domiciled UK residents. This means that meeting mortgage payments could draw a tax charge of 40 per cent if the mortgage is arranged outside the country.