The UK government is to press ahead with tax changes which could affect more than 65,000 bankers working in the country, and potentially affect the attractiveness of London as an international financial centre.

The government has published a background paper reviewing the tax status of non-UK citizens working in the UK. The paper concerns a loophole in the tax rules on residence and domicile, which significantly reduces the tax paid by non-UK citizens, making the City of London a more attractive place for US, French or German bankers for fiscal reasons than their domestic financial centres.