NEW YORK (Bloomberg) — Chancellor of the Exchequer Alistair Darling moved to reassure rich foreigners over plans to close a UK tax loophole, promising not to probe into their overseas earnings if they choose to pay a new levy.

The Treasury said it won't require non-domiciled residents to disclose overseas earnings if they pay £30,000 ($56,000) a year to avoid taxation on money earned abroad. Those who don't pay must disclose overseas income after seven years in Britain.

People paying the fee won't have "to make any additional disclosures about their income and gains arising abroad", Dave Hartnett, acting chairman of the HMRC tax collection wing of the Treasury, wrote in a letter to lobby groups today. "As they declare their remittances to the UK and pay UK tax on them, they will not be required to disclose information on the source of the remittances."

The measure is aimed at mollifying bankers, accountants and business lobby groups concerned the plan announced in October would drive foreigners overseas and hurt London's position as a financial capital. As he did with a new capital gains tax last month, Darling offered concessions while keeping the essence of his plan intact.

The Society of Trust and Estate Practitioners said it welcomed the statement, while pleading for the new tax regime to be delayed by a year to allow the details to be spell out and planned for.

"Problems remain and broad brush assurances are unlikely to calm advisers and their clients, who will expect to see detail," said Keith Johnston, director of policy at the society. "Given the complexity of the changes it seems extremely unlikely" the Treasury will be ready to give detailed assurances by April. The "sensible option" is to defer changes until 2009, he said.

The tax changes won't apply retroactively to gains held in offshore trusts, which was another source of antagonism, the Treasury said in its letter. The Treasury also will not tax money brought into the UK to pay tax or people who bring art works into the country for public display, the letter said.

Darling plans to give more detail on the measures in his annual budget on March 12.

"The retroactivity was one of the more offensive aspects," said David Barker, head of tax at Rawlinson & Hunter in London. People had been "put in a position where gains previously made in a trust had suddenly become taxable. That's unfair."

Currently, about 115,000 people not "domiciled" in Britain avoid tax on income earned abroad, a benefit unavailable anywhere else in the Group of Seven industrial nations. People qualify for the status by being born outside Britain or having family links abroad that suggest they eventually will settle elsewhere.

The Treasury in December issued a consultation document seeking views from industry officials and lobby groups about its proposals and setting out draft legislation. Officials will take those suggestions into account in drawing up rules that will be inserted into the Finance Bill due after the budget.

The opposition Conservatives, who suggested a similar plan days before Darling unveiled his measures, said the chancellor had been forced into a second U-turn on tax policy. Last month, he watered down plans to change the way capital gains are taxed after complaints from small business owners.

"The chancellor is in full retreat in almost all areas at a time when we need strong and competent leadership in the face of uncertainty," said George Osborne, a Conservative member of Parliament who speaks on finance. "We have a desperately weak chancellor who blames junior officials for his mistakes."

Under the Treasury plan, announced on October 9, people earning more than £80,000 a year overseas would be likely to pay the annual fee, sweeping about 10,000 people into the tax net.

The Conservatives suggested an annual charge of £25,000 on non-domiciled workers, which the Treasury says would prompt 14,000 people earning £68,000 a year or more overseas into paying up. The Treasury's best guess is that under either plan 3,000 people would leave the UK immediately and 16,000 would go over the "long-term."

Non-domiciled residents currently contribute £4 billion in taxes to the Treasury, which estimates the changes will boost its income by £800 million in the fiscal year through April 2010 and £500 million the year after.

The Confederation of British Industry said the changes announced by the Treasury represented an improvement on previous plans.

"The clarification is a victory for common sense," CBI deputy director General John Cridland said in a statement. "We need the government to be more careful in the future about sending out a message that Britain is no longer interested in attracting talent and ideas to our shores."