The peer had agreed with civil servants that he would become a “permanent” UK resident when he joined the House of Lords in 2000, meaning he would likely have paid tax on his overseas earnings.
But he later changed that agreement, becoming a “long-term” resident that was non-domiciled for tax purposes, allowing him to avoid taxes on foreign earnings.
“Over the last few months I knew and, after that, of course I was very keen to support him in making that position public,” Hague, now shadow foreign secretary, said.
The admission followed an angry session of Prime Minister’s Questions which saw calls for Hague’s resignation.
Deputy Labour leader Harriet Harman, standing in for Gordon Brown, asked: “What has happened to the tens of millions of pounds of taxes that the shadow foreign secretary promised would be paid by Lord Ashcroft? The shadow foreign secretary stands here without a shred of credibility. One of them must go,” she shouted over jeering from the Tory benches.