A key ally of Rishi Sunak has defended the chancellor’s wife’s continued non-domicile tax status – insisting that the rules help the UK “attract wealthy people from other countries”.
Akshata Murty has announced she will pay UK taxes on all her worldwide income, but it has emerged she could still save £280m in inheritance tax by holding onto her non-dom status.
“This is not a tax dodge,” said Conservative MP Kevin Hollinrake on her non-dom status. “It’s a deliberate policy to attract wealthy people from other countries from around the world to the UK on the basis that the create jobs and create wealth.”
The backbencher, whose constituency sits next door to Mr Sunak’s, said both Labour and Tory governments had been happy with non-dom rules. “They’re there for a reason,” he told BBC Radio 4’s Today programme.
However, Labour said Mr Sunak’s family saved “potentially tens of millions of pounds” through Ms Murty’s non-dom status – and has urged the chancellor’s wife to “pay back all the tax she saved”.
Louise Haigh, shadow transport secretary, said Mr Sunak had also failed to be transparent about his family’s tax status at a time when he was raising taxes for the nation.
“He has come out on a number of occasions to try and muddy the waters around this and to obfuscate,” the frontbencher told the Today programme.
She added: “It is clear that was legal. I think the question many people will be asking is whether it was ethical and whether it was right that the chancellor … benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds less.”
Top tax expert Richard Murphy said Ms Murty might still be able to avoid up to £280m in inheritance tax because of a “loophole” created in treaty between the UK and India dating back to the 1950s.
Mr Murphy said: “This is a massive tax advantage: her potential inheritance tax bill is thought to be as much as £280m on her shares in Infosys, which are estimated to be worth £700m.”
It comes as The Independent revealed that Mr Sunak had been listed as a beneficiary of tax trusts British Virgin Islands and Cayman Islands while setting taxes in the UK as chancellor.
And Mr Sunak admitted holding a US green card while he was chancellor between February 2020 and October 2021 – paying tax in the States while setting UK tax policy.
The Lib Dems accused Mr Sunak of breaking the ministerial code over the green card – pointing to sections which require ministers to be “as open as possible” and ensure “no conflict arises, or appears to arise” between public duties and private interests.
The White House refused to be drawn into the residency row – saying it does not have any information on the green card held by Mr Sunak for nearly two years.
Boris Johnson has defended his chancellor, and has denied No 10 had been briefing against him. The prime minister also said he had no knowledges of Ms Murty’s non-dom status during Friday’s Downing Street press conference.
“I think that Rishi is doing an absolutely outstanding job,” said the PM, before adding: “I don’t think people’s families should be dragged into things.”
But few Conservatives have attempted to defend Mr Sunak over his family’s tax arrangements, and some have questioned whether he will ever be prime minister. “His standing has certainly fallen,” one senior Tory told The Independent.
Douglas Ross, the Scottish Tory leader, called on Mr Sunak to be “open and upfront” about his family’s tax affairs. “If there are more issues that come up, the public deserve to get answers promptly about it, and I would expect the chancellor to answer those concerns.”
The Spectator’s editor Fraser Nelson said: “He misjudged this in that he thought initially that it wasn’t anybody’s business what his wife’s tax status was. If she lives in Downing Street, yes, it’s the public’s business.”
Asked if Mr Sunak could still manage the country’s economy, Mr Hollinrake told Today: “Yes, absolutely I do”, before praising the chancellor’s “incredible skill and incredible judgement”.
