UK Treasury chief Sunak defends wife in tax controversy | Business

LONDON (AP) — Britain’s Treasury chief has defended his wife’s decision to take advantage of rules that allow many foreigners to evade British taxes on their overseas earnings, saying critics have launched a campaign to defamation against her to reach her.

In an interview with the Sun newspaper, Rishi Sunak said 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-domiciled’ tax status, which allows people who are not permanent residents to avoid taxes Britons on money earned abroad. The issue is sensitive for Sunak as he has just raised income tax which most UK residents pay amid a cost of living crisis.

“Dirtying my wife to get at me is awful,” Sunak reportedly said. “Every penny she earns in the UK she pays UK tax, of course. And every penny she earns internationally, for example in India, she would pay full taxes on that.

Sunak said Murty was entitled to use this arrangement as she is an Indian citizen and intends to return to her home country at some point to care for her aging parents.

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

“At the end of the day, we have someone who has lived here for eight years, raises her children here, lives… in taxpayer-provided accommodation and aspires to be the wife of the next Prime Minister, and yet she says she is not a permanent resident of this country,” Emily Thornberry, Labor legal spokeswoman, told the BBC.

“What is relevant is that she is part of the 0.1% of the population who have positively chosen to say that although they live here, they do not live here permanently, and take advantage of this decision to not pay so much tax,” she said.

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 claim not to be 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.

So-called non-doms must pay an annual fee of £30,000 to continue to receive these tax benefits once they have lived in Britain for seven of the previous nine years. The fee is £60,000 once they are resident for 12 of the previous 14 tax years. Tax benefits are not available after 15 years.

Murty owns a 0.91% stake in Bengalaru, India-based Infosys, according to the company’s latest annual report. This 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 private equity firm Catamaran Ventures UK, according to UK government records.

Sunak said he recognizes the non-domicile status has a bad reputation because some wealthy Britons have tried to use it to avoid paying tax, but his wife does not.

“She has her own investments and pays the taxes she owes in the UK,” he told The Sun. “She does 100% everything this country asks of her.”

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