Labour non-dom donor 'will pay all UK taxes'

Labour donor Lord Paul indicated today that he is prepared to give up his controversial non-dom status and pay full tax in the UK.

Despite suggestions that he might quit the Upper House rather than become domiciled, the peer said he "strongly supported" the new rules and would "fully comply".

He also said the Metropolitan Police had told him he would not face any further action over allegations that he abused parliamentary expenses.

In a statement, Lord Paul said: "On the issue of the taxation position of peers, of course it goes without saying that I will be fully complying with the change in the law which the Government is bringing forward.

"I strongly support the Government's proposals in relation to the taxation status of peers and MPs and the membership of the House of Lords, and the House of Commons."

He told the Press Association: "I will be paying all the taxes. I will be qualifying to be in the House of Lords."

Indian-born steel tycoon Lord Paul had come under fire in the wake of the revelation last week that Tory deputy chairman and major donor Lord Ashcroft is a non-dom, despite pledging to become a "permanent resident" when he was awarded a peerage 10 years ago.

The Labour peer, who was recently made a privy councillor, has insisted it was "ridiculous" to compare his situation because he has always been open about his tax status.

A measure to ban non-doms from sitting in Parliament was inserted into the Constitutional Reform and Governance Bill with cross-party support.

Scotland Yard began examining Lord Paul's expenses at the end of last year, following allegations that he nominated a flat he had never stayed in as his main home, allowing him to claim tens of thousands of pounds for his London property.

But the peer said today: "Following media allegations, the Metropolitan Police Service has been carrying out an investigation into my House of Lords expenses as part of its wider inquiries into this issue.

"I am delighted to be able to announce today that the Metropolitan Police Service has informed me that it has decided that, after due consideration, it will no longer be proceeding with any investigation or inquiry in relation to my House of Lords expenses. I very much welcome the police's decision."

The Met refused to confirm it had been investigating Lord Paul.

The Sub-Committee on Lords' Interests has now launched an investigation into Lord Paul's expenses arrangements, its spokesman said.

The process had been on hold while the police carried out their inquiries