Rishi Sunak urged to 'come clean' on wife's tax affairs amid cost-of-living crisis

  • The Chancellor has responded angrily to questions about the tax status of his wife, ITV News Political Correspondent Carl Dinnen reports

Rishi Sunak has been urged to "come clean" on his wife's tax arrangements after it was revealed that she has non-domicile status which exempts her from making UK contributions on international earnings.

Labour Leader Sir Keir Starmer said people facing a cost-of-living crisis deserve to know whether the chancellor's family is using schemes to reduce their own household tax, given he has just raised taxes on millions of working people.

Mr Sunak says his wife Akshata Murty – estimated to be worth hundreds of millions of pounds – had done nothing wrong in choosing a financial arrangement that means she is not legally obliged to pay tax in Britain on foreign income.

Labour accepts her non-dom status in not unlawful but said Ms Murty's tax arrangement gives the impression that it's "one rule for them and another rule for everybody else".

Sir Keir told ITV News: "Everybody who's had their tax increased is entitled to know the basic answer to a basic question which is 'is your family taking advantage of a scheme to reduce your own family's taxation?"

"Everybody is struggling with the cost of living crisis. Prices are through the roof, wages are through the floor - the chancellor has chosen to increase taxes," he added.

"What the chancellor needs to do is to just come clean," Mr Starmer said, "If the chancellor wants to make the political argument to the country that he's got no alternative to put taxes up at the very time when people are really struggling, prices are up, inflation is up.

"If the chancellor's family, at the same time, are using schemes to reduce their own household tax, then the public are entitled to know about that."

Meanwhile Shadow Foreign Secretary Emily Thornberry said Mr Sunak is "benefitting from the choice she has made".

"It is odd looking isn't it, that there she is in Downing Street, the taxpayers paid for flat, bringing up her children, married she hopes to the next prime minister, and yet she believes she's not a permanent resident," Mr Thornberry told ITV News.

The chancellor says Labour has launched an “awful” smear against his family, but the Telegraph reported that unnamed allies of the chancellor claimed the Prime Minister’s office were behind the leaks – an allegation No 10 and No 11 strongly denied.

A No 10 spokeswoman said: “It is categorically untrue that No 10 is behind the briefings.

“The prime Minister and chancellor are united.”

Mr Sunak told The Sun newspaper that Ms Murty was entitled to use the so-called “non-dom” arrangement as she is an Indian citizen and plans to move back to her home country to care for her parents.

The fashion-designer daughter of a billionaire married the Chancellor in 2009 before he became an MP.

She is reported to hold a 0.91% stake in Infosys, an IT business founded by her father, with The Guardian reporting that the share is worth £11.5 million per year to Mr Sunak’s wife.

Both Boris Johnson and Rishi Sunak received a fine for breaking Covid-19 restrictions Credit: House of Commons/PA

The paper also reported Ms Murty had potentially avoided up to £20 million in UK tax by being non-domiciled.

With Ms Murty born in India and her father also from the south Asian country, UK government rules allow her to list India, rather than the UK, as her permanent residence, meaning different tax rules on foreign earnings apply.

The chancellor said it was “unpleasant” to read attacks on his wife “especially when she hasn’t done anything wrong”.

“She hasn’t broken any rules. She’s followed the letter of the law,” Mr Sunak told The Sun.

The Chancellor said his partner “pays full UK tax on every penny that she earns here in the same way that she pays full international tax on every penny that she earns internationally”.

Asked during the interview whether he thought his family were victims of a “Labour smear campaign”, Mr Sunak said he did.

But Labour hit back, with a party source saying “The chancellor would do better to look a little closer to home.

“It’s clear that No 10 are the ones briefing against Rishi Sunak and, after his failure to tackle the cost-of-living crisis, you can understand why.”

Prime Minister Boris Johnson sidestepped questions about Akshata Murty’s tax status when asked on Thursday Credit: Alberto Pezzali/PA

Prime Minister Boris Johnson sidestepped questions on Ms Murty’s tax situation, saying it is important to keep families out of politics “if you possibly can” when asked by broadcasters for his opinion.

Ms Murty confirmed her “non-dom” status after The Independent website first reported the arrangement on Wednesday – the day the 1.25 percentage point rise in national insurance took effect.

It means her permanent home is considered to be outside the UK despite the Sunaks living in Downing Street.

Ms Murty pays an annual levy of £30,000 to the UK Government to keep her non-dom status, her spokeswoman confirmed.

The status will automatically cease once she has resided in Britain for 15 years, with her set to reach that milestone in 2028.