What is non dom tax status? Non domicile meaning and rules - does Rishi Sunak’s wife Ashkata Murty pay UK tax
The chancellor has insisted that his wife pays tax on “every single penny” she earns in the UK and “hasn’t broken any rules”
The Chancellor of the Exchequer was speaking after it was revealed earlier this week that his wife, Akshata Murty, claims the status.
Murty’s non-domicile status, sometimes referred to as non-dom status, means she does not paying UK tax on some of her earnings.
So, what exactly is non-domicile status, is it legal, is Ms Murty paying UK tax and what has Sunak said about it?
Here’s what you need to know.
What is non-domicile status?
Non-domicile status is an optional status for UK residents whose permanent home, or “domicile” home, is abroad.
Domicile refers to where people consider their permanent home over the course of their life, and this can be a foreign country even if they have lived in the UK for many years.
A person’s domicile is usually the country their father considered his permanent home when they were born, but this may be changed if a person moves abroad and does not intend to return.
With this status, people may not have to pay British tax on their foreign earnings, or pay less tax.
Eligible people can claim non-domicile status on their foreign income if their gains are less than £2,000 in the tax year or the money is not brought into the UK, for example by transferring them to a UK bank account.
If neither of these things apply, then a person must pay UK tax but there are certain rules around that.
For more information about non-domicile status, visit the government’s foreign tax help page.
What has Rishi Sunak said?
Speaking in an interview with The Sun, Sunak defended his wife and condemed members of the opposition who have blasted her.
Labour leader Keir Starmer said earlier this week that Murty using schemes to reduce the amount of tax she pays would be “breathtaking hypocrisy”, particularly after voters have seen their tax payments rise.
Mr Sunak, who lives with his family at 11 Dowing Street, said: “To smear my wife to get at me is awful.”
He added: “People, I don’t think, have an issue with the fact that there’s an Indian woman living in Downing Street.
“I would hope that most fair-minded people would understand — though I appreciate that it is a confusing situation that she is from another country.
“Every single penny that she earns in the UK she pays UK taxes on, of course she does.
“And every penny that she earns internationally, for example in India, she would pay the full taxes on that.
“That is how the system works for people like her who are international who have moved here.”
Sunak also rejected Starmer’s claims of hypocrisy, and said he believes non-dom status is viewed negatively because some British-born people have attempted to use it to dodge tax.
He said that Murty “loves her country” and “hasn’t broken any rules”.
“What it comes down to is, my wife was born in India, raised in India. Her family home is in India, she obviously has a very close connection.
“It wouldn’t be reasonable or fair to ask her to sever ties with her country because she happens to be married to me. She loves her country. Like I love mine, I would never dream of giving up my British citizenship. And I imagine most people wouldn’t.
He added: “She hasn’t broken any rules. She’s followed the letter of the law.”
Why is Akshata Murty eligible for non-domicile status?
Akshata Murty’s domicile is India.
The 42-year-old was born near the southern Indian city of Bangalore in April 1980 to parents N.R. Narayana and Sudha Murty.
Together they built software firm Infosys.
Mr Murty was the firm’s CEO from 1981 to 2002 and built it into an empire worth billions of dollars.
He has since become known as ‘the Bill Gates of India’, and the company is now said to be worth around £3.5 billion.
Murty met Rishi Sunak while they were both studying at Stanford University in California.
Sunak, aged 41, was born in Southampton to Indian parents in May 1980.
The pair went on to marry in 2009 and have two daughters. It is believed Murty has been living in the UK with her husband for around nine years.
What is Akshata Murty’s job and what is her net worth?
Akshata Murty owns a stake in Infosys but her full-time employment is with her fashion label, Akshata Designs.
She also owns UK-based venture capital company Catamaran Ventures UK Ltd, which is used to store her vast personal wealth.
Her husband was a shareholder in this company but transferred his shares over to his wife before he became an MP in 2015.
Murty reportedly has a 0.91% stake in Infosys, which is believed to be worth around £500 million.
This figure is said to make her richer than the Queen.
Is non-domicile status legal?
Non-domicile status is controversial, but legal.
It is a historical status which has been around for centuries, and was first introduced by King George III in 1799.
Although the status is legal, it has brought more criticism for Rishi Sunak and his wife.
Earlier this month, the Murty family came under fire as it was revealed that Infosys had continued to operate in Moscow despite Sunak’s advice that firms should cut ties with Russia due to the war in Ukraine.
On Friday 1 April, however, it was reported that Infosys would be closing its Russian office.
Last month, Sunak was slated when he tried to use his card to pay for goods using the wrong kind of scanner, and a PR stunt which saw him fill up someone else’s car was also met with negativity.
He was also accused of being out of touch with voters when he revealed he owns four luxury cars.
Is Akshata Murty avoiding paying UK tax?
Akshata Murty does pay UK tax, but it appears this is only on the money she earns in this country.
A spokesperson for Murty told the Independent she had to use non-dom status because of her Indian citizenship.
They said: “India does not allow its citizens to hold the citizenship of another country simultaneously.
“So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income.”
What is Rishi Sunak’s tax status?
Rishi Sunak’s net worth is unknown, but the Chancellor is believed to be a multi-millionaire.
His tax status is unknown.
When he was appointed as Chief Secretary to the Treasury in 2019, he registered a blind trust - an investment vehicle that’s intended to allow its holder to avoid conflicts of interest by obscuring where the money made from investments comes from.
The Chancellor has repeatedly come under pressure from MPs to reveal the contents of this blind trust amid concerns that some of the money could be held offshore.
This would mean it’s being withheld from the UK’s tax coffers - although this practice is not necessarily illegal.