A senior Conservative MP has called for a review of non-dom tax rules in the wake of revelations about Rishi Sunak’s household finances.
Tobias Ellwood, a top select committee chair and ex minister, said the current rules “are out of date” and “do need to be reviewed”.
The Independent revealed this week that Akshata Murty, Mr Sunak’s multimillionaire wife, has acquired non-domiciled tax status despite living in Britain.
The arrangement means she could have avoided a tax bill of around £4.4m before any tax liabilities overseas – in return for paying an annual £30,000 charge to the UK.
Speaking on Friday morning Mr Ellwood said there was “nothing illegal” about the arrangement, but told Sky News
“If there are bigger, more fundamental questions about the existence of the non-dom status, that is something for us as a country – perhaps and indeed Parliament – to debate.
The chair of the Commons defence select committee added that the issue was distracting from the war in Ukraine, which he said should be the UK’s central focus.
“The idea that we focus on this discussion about following the rules that actually exist at the moment, I think, is a distraction from what we need to be focusing on, which was the previous subject right now, of what Britain is going to do to help and lead other countries support Ukraine,” he said.
Opposition parties last night joined forces to demand answers from the chancellor after it emerged Ms Murty pays no UK tax on her huge foreign earnings.
Tax lawyers also dismissed Ms Murty’s claim that her non-dom status is a consequence of her Indian citizenship, pointing out that she has chosen to adopt it.
Condemning what he said was “breathtaking hypocrisy”, Sir Keir Starmer called for answers about “what schemes she may have been using to reduce her own tax”, a demand echoed by the Liberal Democrats and the Scottish National Party.
Ministers earlier attempted a fightback, condemning what one called “malicious attacks” on a private citizen, while another accused Labour of believing that “wives are merely an extension of their husbands”.
Mr Sunak broke his silence on Thursday night to accuse Labour of running a smear campaign against his family, adding: “To smear my wife to get at me is awful, right?”
The chancellor told The Sun: “I appreciate that in the past British people were trying to use [non-dom status] to basically not pay any tax in the UK. I can see that from my inbox, right? That’s a very clear perception.
“But that’s not the case here. She’s not a British citizen. She’s from another country. She’s from India. That’s where her family is… that’s where she, you know, ultimately will want to go and look after her parents as they get older.
“She 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, say, in India.”
Earlier on Thursday, Boris Johnson ducked questions about the controversy, arguing: “I think it is very important in politics, if you possibly can, to try and keep people’s families out of it.”
