Britain’s Sunak denounces “smears” on his wife’s tax status

By Michael Holden

(Reuters) – Britain’s Finance Minister Rishi Sunak hit back at what he called “libel” about his multi-millionaire Indian wife over her tax status, in criticism that commentators said hurt his chances of being the country’s next prime minister.

The row over the tax status of Sunak’s wife, Akshata Murthy, comes as Britons face the worst hit to living standards since at least the 1950s, including a tax hike introduced by Sunak to help to pay for recovery from the COVID-19 pandemic.

Murthy is the daughter of Narayana Murthy, the billionaire co-founder of IT services company Infosys. She has chosen to hold non-domiciled status, which means she does not pay tax in Britain on overseas income.

In an interview with The Sun newspaper, Sunak defended his wife. He said Murthy, who owns around 0.93% of Infosys, loved his country and shouldn’t have to cut ties because she was married to him. She eventually planned to return to India to care for her parents, he said.

“I hope most unbiased people will understand – although I understand it’s a confusing situation that she’s from another country.”

Sunak has been touted as the successor to Prime Minister Boris Johnson, whose own position has been questioned after widespread criticism over illegal parties held in Downing Street during COVID-19 lockdowns and a series of other scandals.

After being applauded for his strong response to the pandemic, Sunak’s ratings have plummeted as he faces challenges on many fronts, with the tax burden set to reach its highest level since the 1940s .

He also came under fire this week for donating more than 100,000 pounds ($130,360) to Winchester College, his former private school with annual fees of more than 43,000 pounds. His spokesperson said it was just one of the couple’s many philanthropic donations.

Opposition politicians said Sunak had very serious questions to answer about Murthy’s tax status and even supporters of the ruling Conservative Party said the disclosures were damaging.

“F. Scott Fitzgerald once wrote that the rich ‘are very different from you and me,'” the influential blog ConservativeHome said. “Has Sunak become different enough not to grasp the grim reality of his current position? »

The Telegraph newspaper described Murthy as being richer than Queen Elizabeth, while in its editorial the Times said Sunak’s political fortunes, which had already taken a hit after raising taxes, had taken another blow .

“Mr Sunak’s chances of succeeding Mr Johnson look very slim now,” he said.

EVERY PENNY

Murthy’s spokeswoman confirmed on Wednesday – the day social security contributions increased for UK workers and employers – that she was treated as not domiciled for tax purposes in the UK, meaning that she would not pay taxes in Britain on the dividends from the Indian company.

“Every penny she earns in the UK she pays UK tax on, of course,” Sunak told the newspaper. “And every penny she earns internationally, for example in India, she would pay full taxes on that.”

Non-dom status exempts more than 75,000 foreign nationals in Britain from overseas income tax and has been a target for tax campaigners as it massively benefits the very wealthy.

Opposition parties said what Murthy did was legal, but questioned whether it was fair given Sunak’s tax hikes.

Johnson said he was unaware that Murthy held non-dom status and dismissed suggestions his own office informed against Sunak.

“Rishi is doing an absolutely outstanding job,” he said.

Sunak also said in a statement that he held a US green card when he became finance minister in 2020, before returning it on his first official trip to the United States. His spokeswoman said all laws were followed and he paid full taxes while holding the card.

Media reported that Sunak stopped living in the United States in 2013.

Sunak said his opponents used his wife to attack him.

“Dirtying my wife to get at me is awful, isn’t it?” he said.

($1 = 0.7671 pounds)

(Additional reporting by Kate Holton and Andy Bruce, and Mrinmay Dey and Maria Ponnezhath in Bengaluru; Editing by Angus MacSwan)


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