Rishi Sunak and his family potentially avoided paying tens of millions of pounds in taxes through his wife’s “non-dom” status while the chancellor imposed tax increases on the public, Labor said.
The chancellor’s wife, Akshata Murty, bowed to mounting pressure on Friday and announced she would pay UK taxes as Sunak’s position began to look increasingly tenuous.
Murty said he understood that many felt his tax arrangements were “not compatible with [her] her husband’s job as chancellor”, adding that she appreciated the “British sense of justice”. She will pay taxes on all future worldwide income and for the last tax year, but not retroactive income.
Louise Haigh, the shadow transportation secretary, accused Sunak of not being transparent about her family’s financial arrangements as she raised taxes for millions during a deepening cost-of-living crisis. Haigh said that while it was “clear” the arrangement was legal, many Britons would question the ethics involved.
“The chancellor has not been transparent. He has come out on a number of occasions to try to muddy the waters around this and obfuscate,” he told BBC Radio 4’s Today programme.
“It is clear that this was legal. I think the question that a lot of people will be asking is whether it was ethical and correct for the Chancellor of the Exchequer, while racking up 15 separate tax increases for the British public, to benefit from a tax scheme that allowed his household to pay significantly less for a potentially tens of millions of pounds less.”
The Guardian estimates that Murty has potentially avoided some £20m in tax due to his status, for which he currently pays £30,000 a year.
Under non-dom rules, Murty did not legally have to pay UK tax on the estimated £11.5m annual dividends he collects from his stake in Infosys, his billionaire father’s IT business. UK tax residents are expected to pay around £4.5m in tax on dividend payments.
At a news conference on Friday, Boris Johnson admitted that he had not been told about Murty’s non-dom status. But he denied that anyone at No. 10 was reporting against the Sunaks and praised the chancellor for doing an “outstanding job.”
Haigh’s comments follow calls from Labor and the Lib Dems for an investigation into whether Sunak breached ministerial code by not being transparent. Under pressure, the chancellor confirmed on Friday that he had a US green card, meaning he had declared himself a “permanent resident of the US.” for tax purposes for 19 months while chancellor and for six years as deputy.
A source confirmed that Murty also had a green card. This admission seems to weaken Sunak’s defense that his wife is not a Dom because she someday planned to return to live in India.
Furthermore, despite bowing to pressure to pay UK tax on future income and during the last tax year, Murty will retain his non-dom status. In the future, this could allow her family to legally avoid paying inheritance tax.
Amid these calls for greater scrutiny of the chancellor’s tax arrangements and financial interests, Sunak was defended by Kevin Hollinrake, the Conservative MP for Thirsk and Malton in North Yorkshire.
Hollinrake denied allegations that Murty’s non-dom status was “tax evasion”, arguing that the Conservative and Labor governments had used non-dom status in politics to attract wealthy people to the UK.
Speaking on the Today show, Hollinrake said: “This is not tax evasion. It is a deliberate policy to attract wealthy people from other countries in the world to the UK on the basis that they create jobs and wealth in the UK which benefits everyone.”
The Guardian has learned that just days before Sunak increased national insurance contributions, affecting millions of people, the Treasury introduced a new low-tax scheme that is designed in part to benefit some wealthy non-domestic investors. .
Hollinrake continued to defend Sunak for continuing to have a green card and paying taxes in the US even after he became chancellor, saying he needed it when he worked there.
He added that Sunak “then came to the UK and stated that position with the Cabinet Office.” “It doesn’t reduce your UK taxes at all. In fact, with a green card you can often pay more taxes,” he said.