Many of those persecuted in Germany had money seized

The Treasury is expected to offer about �10m to more than 1,000 victims and their families in the UK whose assets were taken or frozen by foreign banks.

Since 2000, the government has offered tax relief on payments made by UK banks to those who had their accounts frozen under the Trading With The Enemy Act.

Now the same relief will be brought in for payments made from abroad.

Many of those who will benefit deposited money in Switzerland before the war and are now being compensated by the Claims Resolution Tribunal for Dormant Accounts.

We are delighted that the government has responded positively to our request to introduce this important extension David Rothenberg Association of Jewish Refugees

Paymaster General Dawn Primarolo is to tell the House of Commons that no income tax and capital gains tax will be paid on compensation comparable to the awards made under the Restore UK scheme.

The measure will be retrospective and cover those who have already accounted for tax on their overseas compensation payments, or their heirs if they have died.

The Association of Jewish Refugees (AJR) has welcomed news of the announcement.

It said it had been in discussions with HM Revenues and Customs for a number of months and was "delighted" the concession would be extended.

AJR treasurer and vice-chairman David Rothenberg said: "We are delighted that the government has responded positively to our request to introduce this important extension... so that the families of Holocaust victims will receive the full benefit from their compensation awards."