UK Treasury chief Sunak defends wife in tax controversy

Apr 7, 2022, 7:31 PM | Updated: Apr 8, 2022, 10:24 am
FILE - Rishi Sunak, Britain's Chancellor of the Exchequer poses for the media as he leaves 11 Downi...

FILE - Rishi Sunak, Britain's Chancellor of the Exchequer poses for the media as he leaves 11 Downing Street in London, Wednesday, March 23, 2022. Sunak has defended his wife’s decision to take advantage of rules that allow many foreigners to escape U.K. taxes on their overseas income, saying critics have launched a smear campaign against her to get at him. (AP Photo/Alastair Grant, File)

(AP Photo/Alastair Grant, File)

LONDON (AP) — Britain’s Treasury chief has defended his wife’s decision to take advantage of rules that allow many foreigners to escape U.K. taxes on their overseas income, saying critics have launched a smear campaign against her to get at him.

In an interview with the Sun newspaper, Rishi Sunak said that he expects scrutiny as a politician but it is unfair to attack his wife, Akshata Murty, who is a private citizen with her own career and independent investments. Murty, a fashion designer and businesswoman, is also the daughter of the Indian billionaire who founded the information technology company Infosys.

Opposition politicians have demanded more details about Murty’s finances after she confirmed she had “non-domicile” tax status, which allows people who aren’t permanent residents to avoid British taxes on money earned overseas. The issue is sensitive for Sunak because he just increased the income taxes most U.K. residents pay in the middle of a cost-of-living crisis.

“To smear my wife to get at me is awful,” Sunak was quoted as saying. “Every single penny that she earns in the U.K. she pays U.K. taxes on, of course she does. And every penny that she earns internationally, for example in India, she would pay the full taxes on that.”

Sunak said Murty was entitled to use the arrangement because she is an Indian citizen and intends to move back to her home country at some point to care for her aging parents.

But the opposition Labour Party rejected Sunak’s explanation, given that Murty has lived in Britain for many years and is married to one of the most powerful men in the country. Sunak and his wife also live in an official government residence that comes with his job as Chancellor of the Exchequer.

“In the end, we have somebody who’s been living here for eight years, raising her children here, living … in accommodation provided by the taxpayer and aspiring to be the wife of the next prime minister, and yet she says that she isn’t a permanent resident of this country,” Emily Thornberry, Labour’s spokeswoman on legal issues, told the BBC.

“What’s relevant is that she’s of the 0.1% of the population who have positively chosen to say that although they’re living here, they’re not living here permanently, and taking advantage of that decision in order to not pay as much tax,” she said.

Claiming non-domicile status is entirely legal under U.K. tax rules that have been in place for more than 200 years.

Under those rules, people who declare that they aren’t permanent residents of the U.K. can opt not to pay British income taxes on overseas income. They are still required to pay U.K. taxes on any income earned in Britain and any overseas earnings they bring into the country.

So-called non-doms must pay an annual fee of 30,000 pounds to continue enjoying these tax advantages once they have lived in Britain for seven of the previous nine years. The fee rises to 60,000 pounds once they are resident for 12 of the previous 14 tax years. The tax advantages aren’t available after 15 years.

Murty holds a 0.91% stake in Bengalaru, India-based Infosys, according to the company’s most recent annual report. That stake would have generated dividends equal to more than 10.6 million pounds ($13.8 million) in the 2020-21 financial year.

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

Sunak said he recognized that non-domicile status has a bad reputation because some wealthy British people have tried to used it to avoid paying taxes, but that isn’t the case with his wife.

“She has her own investments and is paying the taxes that she owes in the U.K.,” he told the Sun. “She is 100% doing everything this country asks of her.”

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UK Treasury chief Sunak defends wife in tax controversy