The UK and US are at loggerheads over the imminent tax clampdown on wealthy non-domiciled foreigners living in Britain, which threatens to hit Americans particularly hard by, in effect, forcing them to pay the £30,000 annual levy twice over.

The British government’s refusal to give way on the issue is exacerbating fears the “non doms” tax changes will drain talent from the City to other jurisdictions, damaging London’s pre-eminent status as a financial services centre. The US is lobbying hard behind the scenes to try to persuade the UK Treasury to change the wording of its draft legislation. The Americans want to ensure the £30,000 fee comes within the scope of a transatlantic treaty designed to avoid double taxation. A fiscal quirk means that, as the proposals stand, the levy will almost certainly not be “creditable” under US rules taxing worldwide income, and so cannot be offset against US tax.