Akshata Murthy, the daughter of Infosys co-founder Narayana Murthy, has announced that she will pay UK taxes on all her income, including from India, to avoid the issue being a “distraction” for her husband, Chancellor of the Exchequer Rishi Sunak.
The 42-year-old entrepreneur has been at the centre of days of headlines after it emerged that her non-domiciled status meant she was not legally bound to pay taxes on her overseas income in the UK. Ms Murthy owns around 0.9% of Infosys stake and therefore receives millions in dividends from the Indian software services major.
"In recent days, people have asked questions about my tax arrangements: to be clear, I have paid tax in this country on my UK income and international tax on my international income,” Ms Murthy said in a statement released on Friday.
"This arrangement is entirely legal and how many non-domiciled people are taxed in the UK. But it has become clear that many do not feel it is compatible with my husband's role as Chancellor. I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family,” she said.
"For this reason, I will no longer be claiming the remittance basis for tax. This means I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises. I do this because I want to, not because the rules require me to. These new arrangements will begin immediately and will also be applied to the tax year just finished," she added.
Describing the UK as a “wonderful country”, Ms Murty – who has been based in Britain for nine years – noted that since arriving she has been made to feel more welcome than she ever could have imagined, in both London and Mr Sunak’s constituency home in North Yorkshire.
But even as the row around her "non-dom status" faced ongoing criticism by the Opposition Labour Party, Mr Sunak was hit with further media revelations. The British Indian finance minister’s spokesperson confirmed a report claiming that he had held a US Green Card while holding the Chancellor’s post at 11 Downing Street until around October last year.
Green Card holders must pay US tax on their worldwide income and pledge that the US is their forever home.
“Rishi Sunak had a green card when he lived and worked in the US," his spokesperson said.
“Under US law, you are not presumed to be a US resident just by dint of holding a Green Card. Furthermore, from a US immigration perspective, it is presumed that permanent resident status is automatically abandoned after prolonged absences from the US,” the spokesperson said.
It was stressed that Mr Sunak followed all guidance and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law. As required under US law and as advised, the minister is said to have continued to use his Green Card for travel purposes.
“Upon his first trip to the US in a government capacity as Chancellor, he discussed the appropriate course of action with the US authorities. At that point it was considered best to return his green card, which he did immediately. All laws and rules have been followed and full taxes have been paid where required in the duration he held his Green Card," his spokesperson added.
British Prime Minister Boris Johnson also insisted that his minister and Downing Street neighbour had done "absolutely everything" required after it was reported he held a US Green Card for a period while chancellor.
"As I understand it, the Chancellor has done absolutely everything he was required to do," he told reporters when asked about the reports on Friday.
Mr Johnson was also asked about reports of a so-called “political hit job” against Mr Sunak with leaks around his tax affairs coming out of 10 Downing Street, which the prime minister categorically denied and also voiced his support for his finance minister.
"If there are such briefings, they are not coming from us in Number 10 and heaven knows where they are coming from. I think that Rishi is doing an absolutely outstanding job," he said.
However, Labour leader Sir Keir Starmer insisted the Chancellor must "come clean" about his family's tax affairs.
"At the moment, it looks to me very much like one rule for them and another rule for everybody else," he said.
Mr Sunak’s popularity as a deemed successor of Mr Johnson has taken a severe hit in the last few weeks, ever since his mini-Budget last month was seen as not doing enough to support struggling families with the cost of living crisis and piling on a high tax bill. The finance minister has insisted that he has put in measures for the poorest and that his Budget was made with a longer-term view of the economy to protect jobs.
