A court has ruled that Donald Trump must hand over tax returns to prosecutors in New York after he lost an appeal against an earlier ruling.

Cyrus Vance Jr, a New York district attorney, has subpoenaed eight years of the president’s personal and corporate tax returns, from 2011 to 2018, and other legal documents from accountancy firm Mazars USA as part of a criminal investigation into hush-money payments to Stormy Daniels and Karen McDougal.

The president’s legal team had objected to the demand, saying that he would suffer “irreparable harm” if his tax returns were made available. His lawyers immediately said they would appeal the latest decision.

Mr Trump himself reacted by claiming the ruling was part of a political plot against him.

His legal team appealed against the ruling but a federal appeals court has now turned down that appeal, rejecting the argument that as president he is above the law.

Mr Trump's legal team now has 10 business days to file a petition to appeal this ruling in the Supreme Court, where the court is currently divided 5-4 in favour of conservative justices.

Mr Trump has repeatedly refused to release his taxes voluntarily. A recent investigation by ProPublica revealed that Mr Trump's organisation inflated the value of his businesses to investors and deflated their value to tax authorities in what one expert called a "version of fraud".

In February, Mr Trump's former lawyer, Michael Cohen, testified before Congress. In response to a question from Rep. Alexandria Ocasio-Cortez (D-NY), he said that Mr Trump was interested in reducing his taxes and explained the process by which that could be done.

“What you do is you deflate the value of the asset, and then you put in a request to the tax department for a deduction.”

Federal data shows that the Internal Revenue Service (IRS) has turned to auditing the poor at a higher rate because it is easier than trying to audit the rich.