Rishi Sunak’s wife Akshata Murty has revealed that she is treated as non-domiciled for UK tax purposes due to her Indian citizenship. Akshata Murty, who is believed to be worth hundreds of millions of pounds, has confirmed the arrangement which means she is not legally entitled to pay tax in Britain on foreign income.
Ms Murty, the fashion designer daughter of a billionaire who married the Chancellor in 2009, insisted she paid tax on all UK earnings and said the set up was necessary as she is a citizen Indian. However, experts have disputed this.
Business Secretary Kwasi Kwarteng defended the arrangement as ‘in order’ as he called the scrutiny of his finances ‘completely unfair’ but was unable to rule out the status being used to reduce taxes. Labor leader Ed Miliband said the questions were legitimate as Mr Sunak’s immediate family ‘shelter much of his income from UK taxes’.
Ms Murty confirmed her ‘non-dom’ status after the independent website first reported her on the day the Chancellor’s National Insurance hike took effect on Wednesday. The arrangement means his permanent residence is considered outside the UK despite the Sunaks occupying Downing Street.
Mr Miliband, the shadow climate change secretary, told BBC Breakfast: “The problem that Rishi Sunak has to address – and I think we have to be careful about people’s spouses being brought into the public domain, but I think that’s a legitimate question – that is, at a time when people are facing incredibly tight finances and Rishi Sunak is raising taxes, he says to pay for utilities, his immediate family shields much of their income from UK taxes.
“I think there’s a legitimate public question as to whether this is the right decision because he’s the one asking us to pay more taxes.”
Mr Kwarteng dismissed the claim as false, saying “housing sounds like you’re avoiding things”.
“I think she’s been very clear, she’s been very transparent, the Chancellor has been very transparent and this non-dom status has been part of the British tax system for over 200 years,” he told BBC Breakfast.
Chancellor Rishi Sunak and his wife Akshata Murty watch a test match at Lord’s (PA)
Cabinet minister said she pays taxes ‘abroad’ but was unable to say where when asked if she pays all foreign taxes in India or in paradise fiscal like the Cayman Islands. Asked on BBC Radio 4’s Today program whether Ms Murty is a tax evader, Mr Kwarteng replied: ‘I don’t know anything about her tax affairs.
“What I do know is that she’s been very clear that she’s an Indian citizen, once she’s lived here for 15 years, the non-domiciled status goes away, so it will happen in a few years, I don’t know when. As far as I’m concerned, it’s good enough for me and I think we can move on.”
A spokeswoman for Ms Murty confirmed she held non-dom status after reports surfaced.
“Akshata Murty is a citizen of India, the country of her birth and the home of her parents,” the spokeswoman said. “India does not allow its citizens to simultaneously hold the citizenship of another country.
“So under UK law, Ms Murty is considered not to be domiciled for tax purposes in the UK. She has and will continue to pay UK tax on all her UK income.
Professor Richard Murphy, a University of Sheffield academic who co-founded the Tax Justice Network, questioned her statement, insisting that being a non-dom is a ‘choice’ she can give up. Domicile has nothing to do with a person’s nationality,” he said.
“In other words, the claims made in the statement released by Ms Murty are false, and as evidence, the mere fact that someone has Indian citizenship will never automatically grant them non-dom status in the UK. .”
It is understood that Mr Sunak declared his wife’s tax status when he became a minister in 2018 and that the Treasury was also aware so that any potential disputes could be managed. Ms Murty is listed on LinkedIn as a director of equity and private equity firm Catamaran Ventures, gym chain Digme Fitness and men’s outfitters New and Lingwood.
She also reportedly owns a 0.91% stake in Infosys, which was founded by her now-billionaire father.
A non-dom tax status generally applies to someone who was born overseas, spends much of their time in the UK but still considers another country their permanent residence or ‘home’. In Ms Murty’s case, she would have to claim that the UK is not her permanent home.
The citizenship of an individual living in the UK is irrelevant to non-dom status, as it is possible for a British citizen, or a person born in the UK, to claim that they is a non-dom. According to the Home Office guidelines: “A person may change nationality without this affecting their domicile, or may acquire a change of domicile while retaining their original nationality.
“The fact that a person has acquired a new nationality may be a relevant element in demonstrating a change of domicile, but is not conclusive, depending on the reasons for the change. If a person renounces his former nationality, this may suggest a change of domicile.
The status is not granted automatically as a person must claim the exemption in their tax status when completing their UK tax return. According to the government, a person’s domicile is generally the country where his father considered his permanent residence at the time of his birth.
In Mrs Murty’s case, she was born in India, so she ticks the first box to say she is not domiciled in the UK. Others may also inherit their home from their parents, meaning they may still be born in the UK but have non-dom status.
When assessing a person’s domicile, the tax authorities will consider a number of factors including the country of permanent residence and the length of time a person intends to stay in the UK. On tax, the rules say you don’t pay UK tax on foreign income or gains if it’s less than £2,000 a year and you don’t bring it into the UK.
If you earn more than £2,000 overseas or bring money into the UK, you have to pay UK tax on it – although it can be reclaimed. Or you can pay an annual fee, depending on the length of your stay in the UK.
The fee is £30,000 if you have been in the UK for at least seven of the last nine tax years, or £60,000 for at least 12 of the previous 14 tax years. Therefore, if you reside in the UK but are a citizen of another country, you still have to pay a fee.
For high net worth individuals, many will opt for the annual fee as income from foreign business and investment is likely to incur a much higher tax bill.