Rishi Sunak faces 'very serious questions' over wife Akshata Murty's non-dom status and tax affairs

Could the tax affairs of Rishi Sunak's wife prove to be a problem for him? ITV News Political Correspondent Carl Dinnen gives his analysis

Rishi Sunak faces "very serious questions" over his wife's tax affairs, Labour leader Sir Keir Starmer has said, after it was claimed she could have saved millions in UK contributions by not being registered as a permanent UK resident.

Akshata Murty, said to be worth hundreds of millions of pounds, has non-domicile status, which means her home is considered outside of Britain and exempts her from paying UK tax on her foreign earnings unless brought into the UK.

A spokesperson for Ms Murty said she has always paid UK taxes on her UK income, but Sir Keir has accused her and Mr Sunak of "breathtaking hypocrisy", given the chancellor has just raised taxes on working people.

The chancellor's wife is a citizen of India, which "does not allow its citizens to hold the citizenship of another country simultaneously", her spokesperson said, so under UK law she is "treated as non-domiciled for UK tax purposes".

But Labour says that despite non-dom status being entirely legal, it is often used as a mechanism to find loop holes to avoid paying UK taxes.

Asked if Ms Murty had done anything wrong by having non-domiciled status, Sir Keir said: "The Chancellor has imposed tax rise after tax rise on working people. And he's said time and again there's no alternative, we've got no option.

"If it now transpires that his wife has used schemes to reduce her own tax then that's breathtaking hypocrisy, and only goes to show it's more evidence of just how out of touch this Chancellor is.

"And I think he's got very, very serious questions to answer in relation to these schemes."

It is understood that Mr Sunak declared his wife's tax status when he became a minister in 2018, and the Treasury was aware that potential conflicts could be managed.

Ms Murty is listed on LinkedIn as the 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, founded by her now billionaire father.

Asked if she should change her tax status, Sir Keir added: "We need complete transparency on this so that we can all understand what schemes she may have been using to reduce her own tax.

"But to use a scheme when the chancellor is out there day after day saying we need tax rises on millions of people in this country who are really, really struggling is breathtaking hypocrisy."

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Boris Johnson refused to comment on his next door neighbour's wife, saying it's "important" to keep people's families out of politics.

"What I will say is that Rishi and I are working very hard on a massive long-term British energy security strategy, that is what we are focused on," he said.

What is non-domicile status?

UK residents whose permanent home ("domicile") is outside of the UK may not have to pay UK tax on foreign income, according to HM Revenue and Customs (HMRC) guidance.

The same rules apply if you make any foreign capital gains, for example you sell shares or a second home.

"Your domicile’s usually the country your father considered his permanent home when you were born," states the government guidance.

"It may have changed if you moved abroad and you do not intend to return."

What tax do you pay if you have non-dom status?

According to HMRC, you do not pay UK tax on your foreign income or gains if they’re less than £2,000 in the tax year, or you do not bring them to the UK, for example by transferring them to a British bank account.

However, the government states you must report foreign income or gains of £2,000 or more, or any money that you bring to the UK.

You can then either pay UK tax on them, or claim the "remittance basis" which means you only pay UK tax on the income or gains you bring to the UK, but:

  • You can lose tax-free allowances for Income Tax and Capital Gains Tax

  • Or pay an annual charge of £30,000 if you have been a UK resident for at least seven of the previous nine tax years, and £60,000 for at least 12 of the previous 14 tax years.

However, if you work in both the UK and abroad, you don't have to pay tax on foreign income or gains - even those brought to the UK - if you are entitled to a "foreign workers' exemption".

You only qualify for an exemption if:

  • your income from your overseas job is less than £10,000

  • your other foreign income (such as bank interest) is less than £100

  • all your foreign income has been subject to foreign tax (even if you did not have to pay, for example because of a tax-free allowance)

  • your combined UK and foreign income is within the band for basic rate Income Tax

  • you do not need to fill in a tax return for any other reason