Gordon Brown is to close a controversial tax loophole that has saved Labour donors millions.

The chancellor will act to shut the "non-domicile status" get-out clause following an Inland Revenue investigation last year. The use of the loophole by top Labour donors, such as Lakshmi Mittal, is estimated to cost the exchequer £5 billion a year and could bring a saving equivalent to two pence off the basic rate of income tax.