Labour donor Lord Paul will give up his “non-dom” status amid the furore over Lord Ashcroft.
The Indian-born businessman said he will step into line with new regulations that will ban peers in the House of Lords from not paying tax in the UK on money earned abroad.
He insisted his case was far removed from that of Lord Ashcroft, who he said had been asked to pay tax in the UK after agreeing to become a permanent resident when he accepted his peerage in 2000.
The issue has become a hot topic in the lead-up to the general election, with Labour using it as a stick to beat the Conservatives. David Cameron claims his party has moved on from relying on a few wealthy backers and said a loan from Lord Ashcroft has been repaid.