London Mayor Boris Johnson poses in New York's Times Square after ringing the opening bell at the NASDAQ Market September 14, 2009
London Mayor Boris Johnson poses in New York's Times Square in 2009Reuters

Mayor of London Boris Johnson has allegedly settled a US tax demand after initially refusing to pay a capital gains tax bill arising from his dual American-British passport.

Johnson, who was born in New York, has been fighting his case against the undisclosed sum for months.

According to Johnson's spokesperson, who spoke to the Financial Times, "the matter has been dealt with".

Under US law American citizens, including those holding dual citizenship, have to file a tax return regardless of where they live or where they earn their income.

In November last year, Johnson explicitly said he would not pay his tax bill.

"No is the answer. I think it's absolutely outrageous. Why should I?" Johnson said during an interview with National Public Radio.

"I think, you know, I'm not a ... I, you know, I haven't lived in the United States for, you know, well, since I was five years old ... I pay the lion's share of my tax, I pay my taxes to the full in the United Kingdom where I live and work."

Johnson earns £144,000 (€188,000, $218,000) as Mayor of London and £250,000 a year for his column in the Telegraph, which means he earns too much to be eligible for foreign-earned income exclusion. This level is set at $97,600 for income earned by US citizens overseas.

Meanwhile, Johnson has been pushing to get President Barack Obama's envoy to pay £5m in congestion charges from 2011, and £7m by 2013.