The Indian wife of the British finance minister said she will pay taxes on all her worldwide income in the UK after her financial arrangement came into the spotlight.
Akshata Murty, the wife of Chancellor of the Exchequer Rishi Sunak, said on Friday evening that she made the decision because she didn’t want her non-domiciled status—which exempts her from paying UK tax on foreign income—to be a “distraction” for her husband.
Murty, the fashion-designer daughter of an Indian billionaire, confirmed she held non-dom status after the Independent revealed the arrangement on the day a national insurance hike hit millions of workers.
It means the Indian national is only liable to pay UK tax on her British income, but not on foreign income—unless it is brought into the UK—until her residence in the UK reaches 15 years.
Individuals can choose to give up their non-dom status and be considered British for tax purposes if they intend to permanently live in the UK.
Earlier on Friday, Sunak told The Sun that Murty “ultimately will want to” return to India as her parents get older and that she had paid UK tax on “every single penny that she earns in the UK” and full taxes elsewhere on “every penny that she earns internationally, for example in India.”
But Murty later put out a statement saying she decided to pay taxes in the UK for all her income as she didn’t want her tax status, which was “entirely legal,” to be a “distraction” for her husband.
“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,” she said.
“For this reason, I will no longer be claiming the remittance basis for tax.”
Murty said it means she would “now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises.
She also said she was doing this because she wanted to, not because it was required by the rules.
“These new arrangements will begin immediately and will also be applied to the tax year just finished,” she added.
Sunak has faced intense scrutiny following the disclosure earlier this week that Murty, who is thought to be worth hundreds of millions of pounds, held non-dom status.
Earlier, a spokeswoman for Sunak released a statement confirming that the Chancellor kept his U.S. green card until October last year when he sought guidance ahead of his first U.S. trip in a government capacity.
The U.S. inland revenue says anyone who has a green card is treated as a “lawful permanent resident” and is considered a “U.S. tax resident for U.S. income tax purposes.”
The spokeswoman said Sunak continued to file U.S. tax returns, “but specifically as a non-resident, in full compliance with the law,” having obtained a green card when he lived and worked in the United States.
Prime Minister Boris Johnson defended Sunak. When questioned about Murty’s non-dom status at a press conference in Downing Street, Johnson said the chancellor has been doing an “absolutely outstanding job” and that he didn’t think “people’s families should be dragged into this.”
Commenting on Sunak’s U.S. green card, Johnson said, “As I understand it the chancellor has done absolutely everything he was required to do.”
The prime minister also denied allegations in media reports that his office had been briefing against Sunak, saying, “If there are such briefings, they are not coming from us in No 10, and heaven knows where they are coming from.”
