Sunak's wife Akshata Murty will pay UK tax on overseas income
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Akshata Murty said the rules do not require her to make the change but she wanted to after an onslaught of criticism over her tax-reducing, non-domiciled status. The Prime Minister, meanwhile, was forced to deny No 10 was behind briefings against Ms Murty – and fresh controversy relating to Mr Sunak erupted as it emerged he held a US green card when he entered No 11. Critics claimed it meant he had a “conflict of interest” as he had permanent resident status in the US while being responsible for UK tax policy.
It came after revelations which have been damaging for the Chancellor, who is facing criticism for pushing up taxes while his wife paid no tax on money she made overseas.
But in a statement, Ms Murty said: “I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family.
“For this reason, I will no longer be claiming the remittance basis for tax.
“I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world [it] arises. I do this because I want to, not because the rules require me to.
“These new arrangements will begin immediately and will also be applied to the tax year just finished.”
The Chancellor previously defended his wife, insisting she has “followed the letter of the law”. He said she was the target of “unpleasant smears”.
Mr Sunak also said he believed his family were victims of a “Labour smear campaign”.
However, allies of the Chancellor have accused No 10 of being behind the “hit job”, which coincided with the 1.25 percent hike on National Insurance coming into force.
Asked about this, the Prime Minister told a press conference: “I would just stress that the Chancellor Rishi is doing an absolutely outstanding job and as far as possible… I don’t think people’s families should be dragged into this.”
Ms Murty, who is said to be worth hundreds of millions of pounds, had acted within the law by opting to be exempt from paying tax in the UK on foreign income.
The fashion designer daughter of a billionaire, who wed the Chancellor in 2009, is entitled to use the non-dom arrangement as she is an Indian citizen.
As India, rather than the UK, was listed her permanent residence, different tax rules on foreign earnings applied and she has been paying an annual levy of £30,000 to the Government to retain this non-dom status, which was to expire in 2028.
Mr Sunak insisted she was not trying to pay less tax amid speculation she potentially avoided up to £20 million in UK tax. The couple met while Mr Sunak was studying at Stanford University in the US – and they own a home in Santa Monica, California.
The pair held green cards permitting US residence until more than a year into his Chancellorship, before giving them up.
A spokeswoman for Mr Sunak said permanent resident status is “automatically abandoned after prolonged absences from the US”.
The Chancellor – “as required under US law and as advised” – continued to use his green card for travel purposes and returned it on his first trip as Chancellor after discussions with US authorities, she said.
She added: “All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”
The US inland revenue says anyone who has a green card is treated as a lawful permanent resident and is considered a “US tax resident for US income tax purposes”.
Labour denied it was behind any attacks on Ms Murty, saying the Chancellor should look “a little closer to home” for answers. A spokesman said: “It’s clear No 10 are the ones briefing against Rishi Sunak and, after his failure to tackle the cost-of-living crisis, you can understand why.”
Labour’s shadow attorney general Emily Thornberry meanwhile said: “We have somebody who’s been living here for eight years, raising her children here, living at… Downing Street in accommodation provided by the taxpayer and aspiring to be the wife of the next prime minister, yet she says that she isn’t a permanent resident of this country.”
A No 10 spokeswoman denied the Prime Minister’s office was sneaking out the allegations, saying: “It is categorically untrue that No 10 is behind the briefings.” A Treasury source said: “Neither Rishi nor anyone in his team believes this is coming from No 10.”
Senior Conservative MP Tobias Ellwood – Chairman of the Defence Select Committee – said: “If there are bigger, more fundamental questions about the existence of the non-dom status, that is something for us as a country…to debate. Non-dom rules are out of date, they need to be reviewed.”
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