Rishi Sunak’s wife pays £30,000 a year to secure her non-domiciled tax status, her spokesperson has confirmed and accepted it was possible that Akshata Murty uses the status to take advantage of tax havens for income earned outside the UK.
As political pressure increased on the chancellor and his spouse, the spokesperson said Murty had no plans to say where she pays tax on overseas income as that information was not “relevant”.
The spokesperson declined to elaborate on the initial explanation for Murty’s non-dom tax status – the fact she has Indian citizenship – when this would still mean such a tax arrangement was a choice. They accepted it was possible that Murty’s arrangements meant she minimised her tax using tax havens.
They said no further details would be given, other than to say that Murty abided by all necessary rules.
Labour called for clarity over her tax arrangements, while Keir Starmer said it would be “breathtaking hypocrisy” if she had been reducing her liabilities while the chancellor was raising taxes on others.
There was also concern from some Conservative MPs, with one former minister saying the revelation was particularly unfortunate on the day the national insurance rise came into force. “The perception is, what is the problem? Here is someone worth £3bn who has a different tax arrangement. I’m sure everything is above board but that’s not the point.”
Murty receives about £11.5m in annual dividends from a stake in her family’s IT business empire, Infosys, which is headquartered in Bengaluru, India, and listed on the Indian and New York stock exchanges.
Under UK tax laws, Murty’s status as a non-dom means she does not have to pay tax on dividend payments from overseas companies. UK resident taxpayers currently pay up to 39.35% tax on foreign dividend payouts.
It is not known where she pays tax on this overseas income. It previously emerged that Murty is a shareholder in a restaurant business that funnelled investments through the tax haven of Mauritius.
Asked where Murty paid tax on her overseas income, a spokesperson said Murty had no plans to comment on this because it “doesn’t seem relevant”.
While both the non-dom status and the possibility of minimising tax by moving overseas income through tax havens would be entirely legal, it would seem politically difficult for Sunak to benefit financially in such a way, especially while he has been raising taxes in the UK.
It also remains unclear why Murty has non-dom status. After it was revealed by the Independent, a spokesperson said it was because she was a citizen of India, which does not allow Indians to hold the citizenship of another country simultaneously, meaning she “is treated as non-domiciled for UK tax purposes”.
However, tax experts have said non-dom status is not automatic but a choice.
Prof Richard Murphy, a Sheffield University academic who co-founded the Tax Justice Network, 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.”
The spokesperson did not comment on the apparent contradiction.
The Labour MP Chris Bryant said the situation needed to be explained. “This is just wrong. Non-dom status is not automatic and the Treasury needs to urgently clarify this inaccurate statement.
“After shutting down legitimate questions about Infosys and its operations in Russia last week, it’s time for Rishi Sunak to come clean.”
Starmer said Sunak “has very, very serious questions to answer”. The Labour leader told Sky News that Sunak had repeatedly raised taxes. “He says all of this is necessary, there’s no option. If it now transpires that his wife has been using schemes to reduce her own tax, then I’m afraid that is breathtaking hypocrisy.
“We need complete transparency on this, so that we can all understand what schemes she may have been using to reduce her own tax.”
Earlier the business secretary, Kwasi Kwarteng, insisted that the chancellor and his wife had been “incredibly transparent” about the arrangement, but was unable to say whether she paid tax on foreign earnings in India or another jurisdiction, such as the Cayman Islands.
Speaking to BBC Radio 4’s Today programme, he said: “She’s an Indian citizen. And so she, as you say, pays tax here on UK income, but pays tax abroad on foreign income.”
But asked where she paid tax abroad – in India or elsewhere such as the Cayman Islands – Kwarteng said: “I don’t know anything about her tax affairs.”