Tax campaigners have been quick to point out that non-dom status is a choice individuals make rather than something that is automatically conferred as a result of nationality.
Rishi Sunak’s wife Akshata Murthy has been criticised for a misleading statement which was issued in defence of her non-dom tax status, meaning she saves millions of pounds in tax on dividends collected from her family’s IT business empire.
Non-dom status is an optional status for UK residents whose permanent home – or “domicile” – is abroad. With such a status people may not have to pay tax on foreign income.
The Independent revealed that Murthy has claimed non-domicile status, meaning she does not have to pay UK tax on income earned abroad. Sources have told the paper that the tax saving scheme could have saved her millions of pounds in tax on foreign earnings over several years.
Murthy is the daughter of Indian billionaire N.R Narayana Murthy, the sixth-richest man in India and co-founder of Infosys, an IT company.
Following revelations of her tax status, a spokeswoman for Murthy issued a statement which has since been criticised as ‘misleading and inaccurate’.
The statement said: “Akshata Murthy is a citizen of India, the country of her birth and parents’ home. India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Ms Murthy is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income.”
Tax campaigners have been quick to point out that non-dom status is a choice individuals make rather than something that is automatically conferred as a result of nationality.
Professor Richard Murphy, co-founder of left-wing campaign group the Tax Justice Network, tweeted: “Domicile has nothing to do with a person’s nationality”, adding: “In other words, the claims made in the statement issued by Ms Murty are wrong, and as evidence, just because a person has Indian citizenship will never automatically grant them non-dom status in the UK.”
Any resident of the UK would have to choose to declare they believed themselves to be eligible for “non-domiciled” status from HM Revenue and Customs. Jo Maugham, director of the Good Law Project called it a ‘terrible statement’ and tweeted: “UK tax law (there is no such thing as ‘British’ law) does not treat Ms Murty as non-domiciled. She has to choose to claim non-dom status and agree to pay a modest fee for doing so.”
Sunak’s family wealth has come under growing scrutiny in recent weeks following his disastrous Spring statement which failed to help millions of ordinary workers with the cost of living crisis.
He has faced questions over claims his family is profiting from Kremlin operations while he is urging businesses to cut ties with Russia. Murthy holds a stake in her father’s firm Infosys, which was reported to operate in Moscow and has links to a major Russian bank.
Since then, Infosys has announced that it is urgently shutting down its Moscow office.
Basit Mahmood is editor of Left Foot Forward
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