Rishi Sunak’s family is accused of ‘sheltering’ from UK tax

Chancellor Rishi Sunak’s family has been accused of “sheltering” itself from paying tax in the UK after it emerged his wife holds non-domiciled status.

Akshata Murty, estimated to be worth hundreds of millions of pounds, confirmed the arrangement that means she is not legally entitled to pay tax in Britain on foreign income.

Murty, the fashion-designer daughter of a billionaire who married the chancellor in 2009, insisted she pays taxes on all UK income and said the set-up is required because she is an Indian citizen. However, experts disputed this.

Her tax status is a “choice”

Professor Richard Murphy, the Sheffield University academic who co-founded the Tax Justice Network, questioned her statement, insisting that being a non-dom (non-domiciled) is a “choice” she can relinquish. He said:

Domicile has nothing to do with a person’s nationality,

In other words, the claims made in the statement issued by Ms Murty are wrong, and as evidence, just because a person has Indian citizenship will never automatically grant them non-dom status in the UK.

Labour MP for Hampstead and Kilburn Tulip Siddiq said Sunak had “big questions to answer”:

The Chancellor has big questions to answer.

He must urgently explain how much he has benefited at the same time he was putting taxes up for millions of working families and choosing to leave them £2620 a year worse off. https://t.co/58gXghFaDB

— Tulip Siddiq (@TulipSiddiq) April 6, 2022

Trade union Clare Hepworth asked:

Now it's been disclosed that Sunak's wife has Non Dom status, in other words doesn't pay tax on UK earnings, what does that mean for his role as Chancellor ?
What does it mean given her company claimed substantial sums under the furlough scheme?
Something very very wrong here.

— Clare Hepworth OBE (@Hepworthclare) April 7, 2022

While emeritus professor of accounting Prem Sikka added:

Rishi Sunak’s multi-millionaire wife claims non-domicile status allowing her to save millions of pounds in tax.
Non-dom status is only available to a select few people living in the UK. Sunak could change the law but has not. https://t.co/Uq5ghp9vPZ

— Prem Sikka (@premnsikka) April 7, 2022

Business secretary Kwasi Kwarteng defended the arrangement as “in order” as he struck out at the scrutiny of her finances as “completely unfair”, but was unable to rule out the status being used to reduce tax.

Sheltering income from UK taxes

Labour frontbencher and shadow climate change secretary Ed Miliband, said questions were legitimate as Sunak’s immediate family “are sheltering a large part of their income from UK taxes”. Murty confirmed her “non-dom” status after the Independent website first reported it on the day the chancellor’s national insurance hike took effect on Wednesday.

The arrangement means her permanent home is considered outside the UK despite the Sunaks occupying Downing Street. Miliband told BBC Breakfast:

The issue here that Rishi Sunak needs to answer – and I think we do need to be cautious about people’s spouses being brought into public domain but I think it is a legitimate question – which is, at a time when people are facing incredibly strained finances and Rishi Sunak is raising taxes, he says to pay for public services, we’ve got his immediate family sheltering a large part of their income from UK taxes.

I think there is a legitimate public question about whether that is the right decision because he’s the guy asking us to pay more in taxes.

Kwarteng rejected the allegation as untrue, saying “sheltering sounds as if you’re evading things”. He told BBC Breakfast:

I think she’s been very clear, she’s been very transparent, the Chancellor’s been very transparent, and this non-dom status has been part of the UK tax system for more than 200 years,

Pays taxes abroad

The cabinet minister said she pays tax “abroad” but was unable to say where, when asked if she pays all foreign tax in India or in a tax haven such as the Cayman Islands. Asked on BBC Radio 4’s Today programme if Murty is a tax avoider, Kwarteng responded:

I don’t know anything about her tax affairs.

What I do know is that she has been very clear about the fact she’s an Indian citizen, once she’s lived here for 15 years the non-domiciled status falls away so that will happen in a few years, I don’t know when.

As far as I’m concerned that’s good enough for me and I think we can move on from that story.

A spokeswoman for Murty confirmed she holds non-dom status after reports surfaced. The spokeswoman said:

Akshata Murty is a citizen of India, the country of her birth and parents’ home,

India does not allow its citizens to hold the citizenship of another country simultaneously.

So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes.

She has always and will continue to pay UK taxes on all her UK income.

It is understood Sunak declared his wife’s tax status when he became a minister in 2018 and the Treasury was also aware so that any potential conflicts could be managed. Murty is listed on LinkedIn as being director of capital and private equity firm Catamaran Ventures, gym chain Digme Fitness and gentlemen’s outfitters New and Lingwood. She is also reported to hold a 0.91% stake in Infosys, which was founded by her now billionaire father.