Staggering – Owl
Anna Isaac www.independent.co.uk
Akshata Murthy, whose family business is estimated to be worth around £3.5bn, has continued to use the valuable tax status even after Mr Sunak was put in charge of setting taxes for the country in February 2020, according to two people familiar with her financial arrangements.
It is not known exactly how much has been saved by Ms Murthy but sources told The Independent it could have saved her millions of pounds in tax on foreign earnings over several years.
The Treasury declined to comment. A representative for Mr Sunak did not respond to multiple requests for comment.
In a statement issued after publication, a spokesperson for Ms Murthy claimed that she had to use non-dom status because of her Indian citizenship.
The spokesperson said: “Akshata Murty is a citizen of India, the country of her birth and parent’s home.
“India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income.”
The decision to pay less tax through non-dom status is optional.
So-called “non-dom” status is entirely lawful and can save an individual from paying UK tax on income from dividends from foreign investments, rental payments on property overseas or bank interest. The status also means that you avoid UK inheritance tax.
Meanwhile, most people who live in the UK must pay tax on all their income, wherever it comes from. Unlike non-residents, non-doms can live in the UK for 365 days a year.
Tulip Siddiq, Labour’s shadow economic secretary to the Treasury, called for Mr Sunak to “urgently explain how much he and his family have saved on their own tax bill” at the same time as raising taxes for millions of people during the cost of living crisis.
She said: “The chancellor has imposed tax hike after tax hike on the British people. It is staggering that – at the same time – his family may have been benefitting from tax reduction schemes. This is yet another example of the Tories thinking it is one rule for them, another for everyone else.”
The news comes as Mr Sunak’s popularity with voters plunged amid continuing debate over the government’s reaction to surging living costs.
A YouGov poll found more than half of Britons now have an unfavourable opinion of the chancellor, compared with 28 per cent who view him in a positive light.
Mr Sunak raised the tax burden on UK taxpayers to its highest level since the 1940s in his spring statement last month, even as living standards face their sharpest decline on record.
In the latest evidence of the chancellor’s personal wealth it was revealed on Tuesday that the couple donated more than £100,000 to Winchester College, the exclusive private school he attended.
Ms Murthy, who met Mr Sunak while the pair studied at Stanford University in the US, holds investments in a range of companies, and is the daughter of an Indian billionaire, Narayana Murthy.
The No 11 resident is also a director of Catamaran Ventures UK, which is described as “a family office” venture capital and private equity business that operates out of Bangalore and London. Her father is the chair of Catamaran’s Indian arm.
Alongside an MBA, Ms Murthy has a range of business experience and speaks four languages, according to her LinkedIn profile.
One of Ms Murthy’s investments is in Infosys, an Indian company founded by her father that is listed in New York, which generated billions of dollars of revenue last year and has drawn fresh media attention in recent weeks.
The company recently closed its operations in Russia. The step followed criticism about the contrast between its ongoing presence in the country and Mr Sunak’s public call on all companies to “think very carefully” about maintaining any investments in Russia, following the Putin regime’s violent invasion of Ukraine.
Mr Sunak has not declared his wife’s shareholdings on the Register of Members’ Interests and previously said he has ”followed the ministerial code to the letter”.
The ministerial code states that ministers “must ensure that no conflict arises, or could reasonably be perceived to arise, between their public duties and their private interests, financial or otherwise”. It adds that on appointment, ministers have to provide a list of all interests that “might be thought to give rise to a conflict”, this should also cover “interests of the minister’s spouse or partner and close family”.
Dividends from Infosys calculated from Ms Murthy’s stake in the company, of 0.93 per cent suggest the payments could have totalled around £11.6m in the past year.
As a non-dom, Ms Murthy would not have had to pay tax on these dividend payments in the UK. That compares to an ordinary UK resident, who, paying tax on dividends at the so-called “additional rate” (for all dividend payments over the personal allowance) would have to pay tax of 38.1 per cent on the payouts.
The special status could therefore have saved her a bill of around £4.4m in tax, although she may have incurred tax liabilities overseas. There is no suggestion the chancellor minimised his own tax bill.
Yet despite the huge economic reward it can offer individuals, there is no statutory definition of what non-dom means. Instead, HMRC makes a determination taking into account whether they or their father was born outside the UK, or they have lived outside the UK for a number of years.
Notable examples of non-doms in public life have included former Bank of England governor Mark Carney, who is Canadian. Lord Goldsmith, minister for the Pacific, who faced controversy over his non-dom status when he ran in the London Mayoral elections in 2016, and Tory peer Lord Ashcroft who gave up his status to remain in the House of Lords.