LONDON (Bloomberg) — UK Chancellor of the Exchequer Alistair Darling, seeking to assuage concerns that a new tax on foreigners may make the UK less competitive, agreed to a deal reducing the burden on US citizens working in Britain, a person with knowledge of the plans said.

The agreement with the US Treasury will allow thousands of bankers, academics and other Americans working in Britain to offset the annual £30,000 ($60,000) tax on overseas earnings against their US tax liabilities, the person said.

Darling will formally announce the introduction of the new levy in his first annual budget on March 12, the person said. The charge will be imposed on foreigners who've lived in Britain for more than seven years and who want to retain their right as non-domiciled residents not to subject their overseas earnings to British tax.

Darling has dropped a proposal to increase the charge to £50,000 on foreign residents who've been in Britain 10 years, the person said. The plans, first proposed by Darling in October, would eliminate a tax loophole that foreigners enjoy in none of the other Group of Seven leading industrial nations.

Darling will also withdraw plans to include days spent travelling to the UK in the 183-day annual residence allowance foreigners are entitled to before their non-domiciled status is lost, the person said. The proposal had threatened to sweep about 17,000 foreigners, including Swiss bankers, into the tax net.

Darling will also use his budget speech to rule out subjecting overseas assets of non-domiciled residents such as art collections and offshore funds to scrutiny by the U.K. tax authorities, the person said.

The UK Treasury finished a public consultation on February 29 with companies and lobby groups. Until now, non-domiciled residents have been able to avoid income taxes on overseas earnings not brought into the UK.

On February 28 the Confederation of British Industry, which represents 240,000 companies, urged the government to delay plans to raise more tax from foreigners, saying the proposal should be postponed by a year to allow time for consultation.