UK Treasury chief forced to explain his wife’s tax status

LONDON — The UK treasury chief faced pressure to explain his wife’s tax affairs on Thursday after she admitted taking advantage of rules that allow many foreigners to evade UK tax on their overseas earnings.

The controversy erupted after Akshata Murty, the daughter of an Indian billionaire, confirmed a newspaper report that she had “non-domiciled” tax status. The admission is sensitive because her husband, Chancellor Rishi Sunak, has just raised the income tax most UK citizens pay amid a cost of living crisis that is squeezing households across the country. .

Opposition leaders immediately demanded to know if Murty was using the statute to reduce his tax bill by declaring his overseas income in an offshore tax haven.

“The Chancellor has imposed tax hike after tax hike on working people and he has said over and over again that there is no alternative, we have no other choice,” said Labor Party leader Keir Starmer. “If it now turns out that his wife used schemes to cut her own taxes, then that is breathtaking hypocrisy.”

The Independent newspaper revealed Murty’s tax status in an article posted online Wednesday evening. A spokeswoman later confirmed the report, saying Murty is a citizen of India, where she was born and where her parents still live.

“India does not allow its citizens to simultaneously hold the citizenship of another country,” the spokeswoman said. “So under UK law, Ms Murty is treated as not domiciled for tax purposes in the UK.”

“She has and will continue to pay UK tax on all her UK income.”

Sunak and Murty met when they were both students at Stanford University in California. They have been married since 2009 and have two daughters.

Claiming non-domicile status is completely legal under UK tax rules that have been in place for over 200 years.

Under these rules, people who are not considered permanent residents of the UK can choose not to pay UK tax on overseas income. They are still liable to pay UK tax on any income earned in Britain and any foreign income they bring into the country.

Murty, a fashion designer, has a 0.91% stake in Infosys, the Indian information technology company founded by her father, according to the company’s latest annual report. She reportedly received dividends equal to more than 10.6 million pounds ($13.8 million) on that stake in the 2020-21 financial year.

Murty is also a director of private equity firm Catamaran Ventures UK, according to UK government records.

Business Secretary Kwasi Kwarteng defended Murty’s tax status as “in good standing” and he criticized the review of his finances as “completely unfair”.

Although he could not say where Murty pays his foreign taxes, Kwarteng said the Chancellor’s wife made it clear that she was an Indian citizen and paid all of her taxes.

“As far as I’m concerned, it’s good enough for me, and I think we can move on,” he said.

Prime Minister Boris Johnson declined to comment on Murty’s tax status when asked about it in a public appearance.

“I think it’s very important in politics, if possible, to try to keep people’s families out,” Johnson told broadcasters.

But Liberal Democrat Treasury spokeswoman Christine Jardine called on Sunak to “be clear” “in which country his family pays overseas tax and whether it is a tax haven”.

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