Labour has demanded the government let the public see its sums after the Treasury was ordered to calculate how much money could be raised by abolishing the controversial non-dom tax status.
The move, by the chancellor Jeremy Hunt, emerged just hours after Rishi Sunak defended the policy, saying it would cost too much to scrap.
On Friday Mr Hunt was forced to admit he did not know how much ditching the loophole could raise before he increased taxes for millions in last week’s Budget.
The Independent revealed earlier this year that Rishi Sunak’s wife, Akshata Murty, held non-domicile tax status while her husband was chancellor.
The issue was seen as so controversial that even supporters of Mr Sunak initially believed it would ruin his hopes of becoming prime minister.
At Prime Minister’s Questions (PMQs) Sir Keir Starmer, the Labour leader, challenged the prime minister on the issue– saying it could raise billions of pounds for the NHS.
“Scrapping the non-dom status would allow us to train 15,000 doctors every year,” said Sir Keir – calling for an end to “tax breaks for the super-rich”.
But Mr Sunak responded: “The problem with his idea is that it would end up costing Britain money.”
He also pointed to Labour’s previous opposition to ending non-dom status for fear it would turn off investors, as he accused Sir Keir of “peddling fairy tales and gesture politics”.
Hours later the chancellor told MPs he has asked officials to look into how much could be raised by closing the loophole.
But he added that he did not want to sign off any action that “inadvertently loses us more money than we raise”. The highly respected Institute for Fiscal Studies (IFS) think tank told The Independent that its “best estimate” was that abolishing the measure would raise around £3bn a year.
Treasury sources say non-doms already contribute around £8bn a year, money they do not want to send overseas.
Non-dom status, which is lawful, can save an individual from paying UK tax on dividends from foreign investments, rental payments on property overseas, or bank interest.
Appearing before the Commons Treasury committee Mr Hunt denied the suggestion there was “one rule for the rich and another rule for everybody else”.
Asked how much it would raise to close the non-dom loophole, he said: “Well, I’ve asked the Treasury to look into that.”
He added: “I understand that non-doms pay in tax… all the taxes that they do pay, around £8bn of tax a year. So I want to make sure that wealthy foreigners pay as much tax in this country as possible.
“Ireland has a non-dom regime. France has a non-dom regime. These are people who are highly mobile, and I want to make sure that we don’t do anything that inadvertently loses us more money than we raise.”
Pat McFadden, the shadow chief secretary to the Treasury, said: “The government needs to let the public see their calculations on how much the public purse loses due to non-doms, and how much closing the loophole could raise.”
He added: “It is simply not right that a wealthy few can use an expensive loophole to get out of paying their fair share, while the burden of Tory tax rises weigh more and more heavily on working people.
“Labour is clear – if you work here and make your life here, then you should pay your taxes here.”