Rishi Sunak’s wife, Akshata Murty, has revealed she is treated as non-domiciled for UK tax purposes because of her Indian citizenship. 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.
Ms 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.
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. Labour frontbencher Ed Miliband said questions were legitimate as Mr Sunak’s immediate family “are sheltering a large part of their income from UK taxes”.
Ms 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.
Mr Miliband, the shadow climate change secretary, 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.”
Mr Kwarteng rejected the allegation as untrue, saying “sheltering sounds as if you’re evading things”.
“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,” he told BBC Breakfast.
Chancellor Rishi Sunak and his wife Akshata Murty watch a Test match at Lord’s (PA)
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 Ms Murty is a tax avoider, Mr 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 Ms Murty confirmed she holds non-dom status after reports surfaced.
“Akshata Murty is a citizen of India, the country of her birth and parents’ home,” the spokeswoman said. “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.”
Professor Richard Murphy, the Sheffield University academic who co-founded the Tax Justice Network, questioned her statement, insisting that being a non-dom is a “choice” she can relinquish. Domicile has nothing to do with a person’s nationality,” he said.
“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.”
It is understood Mr 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. Ms 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.
A non-dom tax status typically applies to someone who was born overseas, spends much of their time in the UK but still considers another country to be their permanent residence or “domicile”. In Ms Murty’s case, she would need to be claiming that the UK is not her permanent residence.
Citizenship of an individual living in the UK is irrelevant when it comes to non-dom status as it is possible for a UK citizen, or someone born in the UK, to claim they are a non-dom. According to Home Office guidance: “A person can change nationality without it affecting their domicile, or could acquire a change of domicile whilst retaining their original nationality.
“The fact that a person has acquired a new nationality can be a relevant factor in showing a change of domicile, but is not conclusive, depending upon the reasons for the change. If a person gives up their former nationality it may suggest a change of domicile.”
Status is not given automatically because an individual must apply for the exemption in their tax status when filling out their UK tax return. According to the Government, a person’s domicile is usually the country where their father considered his permanent home when the individual was born.
In Ms Murty’s case, she was born in India, so she ticks the first box for claiming she is not domiciled in the UK. Others can also inherit their domicile from their parents, meaning they can still be born in the UK but have non-dom status.
When evaluating someone’s domicile, the taxman will consider a number of factors, including permanent country of residence and how long an individual intends to stay in the UK. When it comes to tax, the rules state that you do not pay UK tax on foreign income or gains if they are less than £2,000 a year and you do not bring them into the UK.
If you earn more than £2,000 from overseas or bring any money into the UK you must pay UK tax on it – although this may be claimed back. Or you can pay an annual charge, depending on how long you have been in the UK.
The charges are £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 are resident in the UK but a citizen of another country, you must still pay a fee.
For high net-worth individuals, many will opt for the yearly charge because the income received from foreign businesses and investments is likely to lead to a far higher tax bill.
