Rishi Sunak's wife to pay UK tax on overseas income

Chancellor Rishi Sunak's wife Akshata Murty has said she will pay UK taxes on her overseas income, following a row over her non-domicile status.

She owns £700m in shares of the Indian IT giant Infosys, founded by her father, from which she received £11.6m in dividend income last year.

As a non-domiciled (non-dom) UK resident she is not required by law to pay UK taxes on her overseas income.

But she told the BBC she did not want to be a "distraction" for her husband.

Her decision to change her tax arrangements follows accusations of hypocrisy against the chancellor, with opposition parties saying Mr Sunak's family is benefiting at a time when the cost of living is going up.

The BBC estimates Ms Murty would have avoided £2.1m a year in UK tax through her non-dom status.

Ms Murty said her tax arrangements had been "entirely legal", but added: "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."

A non-dom is someone who lives in the UK but declares their permanent home to be in another country.

Mr Sunak has accused political opponents of "smearing" his wife to get at him.

He has also said she is entitled to use the non-dom arrangement as she is an Indian citizen and plans to move back to her home country in the future to care for her parents.

Ms Murty will retain her Indian citizenship and her non-dom status which, as the BBC revealed, allows her family to avoid paying inheritance tax in the UK - which at current valuation could amount to £280m.

On Thursday, it emerged she pays £30,000 a year to maintain her non-dom status.

In her statement, Ms Murty also said she would now be paying UK tax "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 (2021-22)," she added.

Labour MP Louise Haigh said Mr Sunak had "not been transparent".

The shadow transport secretary said: "It is clear that was legal.

"I think the question many people will be asking is whether it was ethical and whether it was right that the Chancellor of the Exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds."

Lib Dem Treasury spokesperson Christine Jardine called on the Sunak household to backdate the taxes in full, adding: "Doing something just because you've been found out isn't good enough."

While one former cabinet minister said he had "mild sympathy" for Mr Sunak as he had been subjected to a "nasty ad hominem" attack, he added that every leadership candidate, declared or otherwise, should expect this.

He was naïve if he thought families were "off-limits for attacks".

His view was that the tax row could be as toxic for the chancellor as partygate has been for Mr Johnson.

It was all about a disconnect with ordinary voters. They could not hold a children's birthday party during lockdown, but boozy get-togethers were apparently held at the heart of government.

Similarly, their taxes were being put up by the chancellor, while his wife did not pay UK tax on some of her own earnings.

Read Iain's full analysis here.

Speaking to the Sun newspaper, Mr Sunak said it was unfair to attack his wife as she was a "private citizen", adding: "I'm an elected politician. So I know what I signed up for."

It comes on the same day it was revealed that the couple retained their rights to live and work in the US by having green cards - which requires holders to consider America their permanent home - for more than a year after Mr Sunak became chancellor in 2020.

He returned his green card in October last year, ahead of his first US trip as a UK government minister.

Asked about the issue at a White House daily media briefing, press secretary Jen Psaki said it was a matter for other government departments and declined to comment.

A spokeswoman for Mr Sunak said he had filed US tax returns while he held his green card "in full compliance with the law".

Meanwhile, No 10 has rejected newspaper reports that its staff are leaking damaging stories about Mr Sunak to the media.

And Prime Minister Boris Johnson told reporters at a Downing Street news conference: "If there are such briefings, they are not coming from us in No 10, and heaven knows where they are coming from. I think that Rishi is doing an absolutely outstanding job."

A non-dom is a UK resident who declares their permanent home, or domicile, outside of the UK.

A domicile is usually the country his or her father considered his permanent home when they were born, or it may be the place overseas where somebody has moved to with no intention of returning.

For proof to the tax authority, non-doms have to provide evidence about their background, lifestyle and future intentions, such as where they own property or intend to be buried.

Those who have the status must still pay UK tax on UK earnings but do not need to pay UK tax on foreign income. They can give up their non-dom status at any time.

Ms Murty has chosen to be domiciled in India via her father, the billionaire Narayana Murty.

Read more here.