Akshata Murthy, the wife of UK Finance Minister Rishi Sunak, said on Friday she would stop refusing to pay UK tax on her overseas income – bowing to pressure over the issue.
Public anger at Ms Murthy’s tax status has been heightened by her husband’s decision to hike payroll taxes at a time when soaring inflation leaves Britons facing the biggest squeeze in the cost of living since recordings began in 1956.
Ms Murthy, an Indian citizen, is eligible for so-called ‘non-domiciled’ status in Britain, something available to foreign nationals in Britain who do not consider it their permanent residence. This allowed her to choose to pay UK tax only on income she earned or transferred to Britain.
Ms Murthy is the daughter of one of the founders of Indian IT giant Infosys and owns around 0.9% of the company, which earned her a dividend payout worth £11.6m sterling (about 14 million euros) last year.
In a statement on Friday evening, after two days of critical media coverage, Ms Murthy said she would pay UK tax on her aggregate income, including dividends and capital gains, for the 2021 tax year/ 22 and in the future.
“I understand and appreciate the British sense of fairness and I don’t want my tax status to be a distraction to my husband or affect my family,” she said.
Ms Murthy said her previous tax arrangements were ‘entirely legal’ and she would continue to claim India, not Britain, as her home. Mr Sunak had previously said she intended to return to India to care for her parents when they became infirm.
Mr Sunak has been touted as the successor to Prime Minister Boris Johnson, whose own position has been called into question after widespread criticism over parties held in Downing Street during Covid-19 lockdowns and a series of other scandals.
After being applauded for his strong response to the pandemic, Mr Sunak’s ratings have plummeted as he faces challenges on many fronts, with the tax burden set to reach its highest level since the 1940s.
Earlier on Friday, Mr Sunak said in an interview that his wife’s financial investments were kept separate from his own and that questions about his father-in-law’s wealth and his wife’s tax arrangements were politically motivated attempts to harm him .
“Trying to smear him, smear my wife to get at me, that’s horrible, isn’t it?” Mr Sunak told The Sun newspaper.
The non-domiciled status exempts more than 75,000 foreign nationals in Britain from overseas income tax, and has been a target for tax campaigners as it massively benefits the very wealthy.
Britain’s opposition Labor Party – which has called for an end to non-domiciled status – said Ms Murthy would also have to repay UK tax she had avoided in previous years if she was sincere in now accepting that her tax arrangements were unfair.
Mr Johnson said he was unaware Ms Murthy had non-domiciled status and dismissed suggestions his own office had informed against Mr Sunak.
“Rishi is doing an absolutely outstanding job,” he said.
Mr Sunak also confirmed media reports that he only gave up a ‘green card’ for the US – an immigration status for permanent residents of the US – after becoming a UK minister Finance in 2020.
A spokesman for Mr Sunak said he had paid his taxes in full and had not broken any laws or regulations. – Reuters