Paul Myners, the chairman of the Tate, told the Treasury yesterday that Britain's art galleries and museums could suffer a sharp drop in income if non-domiciled residents left the country.

Mr Myners, who also chairs the Low Pay Commission and the property company Land Securities, said that he had told ministers that they must “be alert to the risk of unintended consequences” if they impose big tax rises on wealthy individuals, since they are a vital source of funding for the arts.

He said: “Non-domiciles have been an important source of funding for our national museums and galleries. About 30 to 50 per cent of the income comes from them. If you look at the V&A, the top six donors are all non-domiciles.”

Galleries and museums often have free admission and although they receive some government grants, the majority of funding comes from private donations, commercial activities and membership.

The Tate is Britain's most popular gallery, with six million visitors a year to its two galleries in London, its one in Liverpool and one in St Ives, Cornwall. Less than 40 per cent of its funding comes from the Government.

Moves to crack down on offshore accounts and assets could also hit art collections. It is thought that bringing a work of art into Britain could be interpreted as importing capital under the planned changes.

Mr Myners, one of the City's leading figures, said he hoped that the final position on non-domicile taxation would be much simpler than what has been proposed so far.

The Government has faced a raft of complaints over its plans to tax non-domiciles who pay taxation only on their UK income.

Critics of the move, which was first mooted in November, have included Lord Jones of Birmingham, the Trade Minister and former director-general of the CBI. However, unions have welcomed the tax plans as an attempt to make taxation fairer.

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