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Tuesday, Nov 28, 2023

While her husband rips you off with endless taxes, Akshata Murty may have avoided up to £20m in tax with non-dom status

While her husband rips you off with endless taxes, Akshata Murty may have avoided up to £20m in tax with non-dom status

Pressure grows on chancellor over tax evasion of wife, who pays £30,000 a year to be classed as non-domiciled

Rishi Sunak’s wife has potentially avoided up to £20m in UK tax by being non-domiciled and pays £30,000 a year to keep the status – revelations that come amid growing political pressure on the chancellor.

Akshata Murty gets about £11.5m a year in dividends from a stake in an Indian IT firm and declares non-dom status, which allows people to avoid tax on foreign earnings, it emerged on Wednesday.

On Thursday her spokesperson said all necessary tax was paid by Murty but declined to say where, as that information was not “relevant”. They conceded it was possible for someone in the multimillionaire’s position to take advantage of tax havens on income earned outside the UK.

Keir Starmer, the Labour leader, said it would be “breathtaking hypocrisy” if Murty had been reducing her liabilities while the chancellor was raising taxes on others amid a cost of living crisis.

The row risks further damaging Sunak’s carefully honed brand among voters and Conservative MPs, already hit by last month’s spring statement, with a former minister warning the timing was especially bad coming days after the national insurance rise came into force.

Murty has collected about 5.4bn Indian rupees (£54.5m) in dividends from Infosys, the Indian-headquartered IT business founded by her father, over the past seven and a half years, the period for which there is public data. Non-dom status for that whole period could have saved her about £20m in UK taxes.

Last year she collected dividends of £11.6m. As a higher rate UK taxpayer she would have been expected to pay 38.1% tax on the payout, which works out at £4.4m. Before 2016, the rate was 30.6%. It rose to 39.35% this week.

One factor which could reduce the total Murty would have been eligible to pay would be any reduction under double tax treaties between the UK and India, tax experts said.

Murty’s spokesperson said they had no comment on the £20m figure beyond reiterating she paid relevant taxes on UK and overseas incomes. They accepted that people with such tax arrangements could theoretically minimise payments using tax havens, while saying they had no comment as to whether Murty did this.

Murty has previously collected other dividend income via the tax haven of Mauritius, which does not tax dividends. The spokesperson also 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.

Labour wrote to Sunak with a series of questions on his wife’s tax position. James Murray, the shadow financial secretary to the Treasury, wrote that it was “in the vital public interest” that he provide clarity on issues including whether he had benefited from his wife’s status, how long she had claimed it and how much she had saved.

“As chancellor it is crucial you both follow the rules and lead by example,” Murray said. “Any impression that there is one set of rules favouring a few, and another for everyone else, threatens the integrity of tax policy in our country.”

The Liberal Democrats said the case showed a law which bars MPs and peers from having non-dom status should be extended to spouses to avoid any risk of conflicts of interest.

There was also concern from some Conservative MPs. A former minister said: “The perception is [an attitude of] ‘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.”

Another Tory MP, a Boris Johnson loyalist, said it would be hard for MPs to stomach given Sunak had put up taxes. “There’s this guy, as rich as Croesus, putting up taxes when people are worrying about the next gas bill.”

On Thursday evening Sunak rejected accusations of hypocrisy or tax avoidance, telling the Sun that every penny owed by Murty in the UK is paid. “To smear my wife to get at me is awful,” he said. “She loves her country like I love mine.”

But Treasury sources strongly denied reports that Sunak believes Downing Street is behind the leaks about his wife’s tax status. “It is categorically not true that Rishi or anyone else in his team believe this is coming from No 10,” one told the Guardian.

While Murty’s spokesperson characterised her tax status as a function of her Indian citizenship, tax experts 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.”

Mike Warburton, formerly tax director at accountants Grant Thornton, said Murty was entitled to Indian tax domicile because of her father and because she was born there, saying it was “entirely legal and entirely appropriate” for her to do this.

He said: “I don’t know, of course, but it may be that those shares are held in an offshore trust, possibly set up by her father. If I had been advising her, I would have suggested it to them. In my view this is all bog-standard planning for anyone who takes professional advice.”

Speaking to Sky News, Starmer said the chancellor “has very, very serious questions to answer”. The Labour leader said 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 the chancellor and his wife had been “incredibly transparent” about the arrangement.

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.”

Kwarteng added that Murty and Sunak had been “very transparent” about her status, and that Sunak had declared it when he became a minister.

“The Treasury, the department which he works in, knows about all those affairs,” he said. “And there is a measure of transparency and he’s been very honest about that. And I think, as far as I’m concerned, that’s good enough for me. And I think we should move on from that story.”

Earlier, Kwarteng had told Times Radio that non-domicile status had existed in the UK “for more than 200 years”.

He said: “That’s something that’s been well established … I think there’s a lot of malicious attacks on someone who, after all, is a private citizen and is not a politician.”


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