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UK Treasury chief pressured to explain wife’s tax status

April 7, 2022 GMT

LONDON (AP) — Britain’s Treasury chief faced pressure to explain his wife’s tax affairs Thursday after she acknowledged taking advantage of rules that allow many foreigners to escape U.K. taxes on their overseas income.

The controversy arose after Akshata Murty, the daughter of an Indian billionaire, confirmed a newspaper report that she had “non-domicile” tax status. The admission is sensitive because her husband, Chancellor Rishi Sunak, just increased the income taxes most British citizens pay amid a cost-of-living crisis that is squeezing households across the country.

Opposition leaders immediately demanded to know whether Murty was using the status to reduce her tax bill by reporting her overseas income in an offshore tax haven.

“The chancellor has imposed tax rise after tax rise on working people and he’s said time and again there’s no alternative, we’ve got no option,” Labour Party leader Keir Starmer said. “If it now transpires that his wife has used schemes to reduce her own tax, then that’s breathtaking hypocrisy.”

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The Independent newspaper revealed Murty’s tax status in a story that was posted online late Wednesday. A spokeswoman later confirmed the report, saying that Murty is a citizen of India, where she was born and her parents still live.

“India does not allow its citizens to hold the citizenship of another country simultaneously,” the spokeswoman said. “So, according to British law, Ms Murty is treated as non-domiciled for U.K. tax purposes.”

“She has always and will continue to pay U.K. taxes on all her U.K. income.”

Sunak and Murty met when both were students at Stanford University in California. They have been married since 2009 and have two daughters.

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 aren’t considered 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.

Murty, a fashion designer, holds a 0.91% stake in Infosys, the Indian information technology company founded by her father, according to the company’s most recent annual report. She would have received dividends equal to more than 10.6 million pounds ($13.8 million) on that stake in the 2020-21 financial year.

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

Business Secretary Kwasi Kwarteng defended Murty’s tax status as “in order,” and he criticized scrutiny of her finances as “completely unfair.”

While he couldn’t say where Murty pays her foreign taxes, Kwarteng said the chancellor’s wife has been clear that she’s an Indian citizen and pays all her taxes.

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“As far as I’m concerned, that’s good enough for me, and I think we can move on from that story,” he said.

Prime Minister Boris Johnson declined to comment on Murty’s tax status when asked about it during a public appearance.

“I think it is very important in politics, if you possibly can, to try and keep people’s families out of it,” Johnson told broadcasters.

But Liberal Democrat Treasury spokeswoman Christine Jardine called for Sunak to “come clean” about “which country his family pays tax in abroad and if it is a tax haven.”