Rishi Sunak has become the new UK Prime Minister, following Liz Truss’s dramatic resignation on 20 October.
Sunak’s path to power was cleared after the only other challenger in the Conservative Party leadership contest - Penny Mordaunt - failed to get enough MPs to back her. Former PM Boris Johnson also failed to make the final ballot. It comes just weeks after Sunak lost out to Truss in this summer’s leadership race.
Until his victory, 2022 had been a torrid year for the Yorkshire MP, who was heavily criticised for his response to the cost of living crisis, and was dragged into the Partygate scandal. His personal affairs also came in for scrutiny after it was revealed his wife Akshata Murty not only had links to Russia, but was also shielding her vast wealth from the UK taxman by holding non dom status.
The former Chancellor faced questions about his own tax affairs and his commitment to the UK, after it emerged he had held onto US green card status well into his tenure as the head of the Treasury. But why was this so controversial? Here’s everything you need to know.
What is Rishi Sunak’s net worth?
Rishi Sunak is believed to be one of, if not the, wealthiest MP sitting in the House of Commons. While specifics around his personal wealth are not in the public domain, he holds a joint-fortune with his wife that’s estimated to be £730 million according to the latest Sunday Times Rich List. Sunak was a banker with Goldman Sachs, before moving into hedge fund management - setting up his own company, Theleme Partners, in 2010.
His investments were put into a blind trust after he became Chief Secretary to the Treasury in July 2019. Blind trusts are designed to hide the source of the money they gain from investments, meaning they can be used by investors to theoretically avoid conflicts of interest. However, the opposition has repeatedly called for the contents of the blind trust to be made public.
Liberal Democrat leader Sir Ed Davey said in October 2021 that the “only people that are blind to it are the public” given they have “no idea where the money is or whether there is a conflict of interest”. The Lib Dems called on Parliamentary Standards Commissioner to investigate why Sunak did not declare any financial interests between 2015 and 2019 before registering his blind trust in 2019.
Rishi Sunak’s wife, Akshata Murty, is very wealthy in her own right. She’s the daughter of Indian billionaire NR Narayana Murthy, who founded software firm Infosys in the 1980s. Ms Murty holds a 0.91% stake in the company, which is estimated to be worth between £400 million and £500 million.
Before becoming an MP in the 2015 general election, Rishi Sunak was a shareholder in his wife’s investment firm Catamaran Ventures UK Ltd - a company that’s believed to service Ms Murty’s vast personal wealth.
Why is Rishi Sunak’s green card so controversial?
On 10 April, Rishi Sunak was forced to refer himself to the former government ethics advisor, Christopher Geidt, as a result of the scandal over him holding a green card and his wife’s non dom tax status. Sunak had a green card until October 2021 - more than six years after he became an MP and over 18-months after he became Chancellor.
The status generally requires you to pay US tax on your worldwide income and to make a legal pledge to one day make the USA your permanent residence. According to international tax experts Lesperance Associates, there is a way of holding the immigration status while living abroad so long as US taxes are paid on US income.
Sunak’s spokesperson confirmed he had filed US tax returns while he had the status "but specifically as a non-resident, in full compliance with the law". They also said he had only used the green card for travel purposes and had returned it ahead of his first official visit to the US in line with guidance from the US authorities. But, living away from the US indefinitely and using the green card solely for travel raises issues with his holding the status in the first place, and suggests Sunak may have broken US immigration laws when re-entering the country to visit his California home.
Lesperance Associates added that giving up the status may also have incurred a major US capital gains tax bill that would need to be paid in 2022 - meaning millions of pounds-worth of his family’s wealth would be going into US coffers rather than those of the UK during a year in which Sunak has served in at least one of the top-two roles you can hold in UK politics.
Whether or not he was exposed to this tax liability depends on if he was considered to have been a ‘Long Term Resident’ or a ‘Covered Expatriate’ and whether he filled out particular forms which could exclude him from paying this liability.
While it’s unclear whether the green card conferred a tax benefit to the ex-Chancellor, it is an extraordinary position for a senior UK politician to be in. It raises questions about Sunak’s commitment to the UK and whether his political thinking and interests may have been impaired by his relationship with the US. If he has indeed broken US immigration rules, it also calls into question whether Sunak will be compromised in any political dealings he has with the US as PM.
NationalWorld has approached Sunak for comment.
Akshata Murty non dom tax row explained
Akshata Murty’s vast personal wealth initially faced scrutiny in March 2022 after Private Eye revealed that Infosys - her father’s firm in which she holds a lucrative stake - had kept its Russia office open despite Vladimir Putin’s invasion of Ukraine. Many other global firms have pulled out of the country, while Rishi Sunak himself had called for businesses to boycott the pariah state.
Infosys insisted to the BBC that it had not benefited from any Russian business and that it had closed the office as of 1 April.
Questions about Ms Murty’s stake in the firm surfaced again only a week later when the Independent reported she was classified as a non dom. This optional tax status allows UK residents who permanently live in another country to not pay UK tax on their foreign income - so long as they pay £30,000 a year.
Being a non dom is likely to have saved Ms Murty millions of pounds in tax on dividends paid out by her India-based Infosys shareholding - especially given Indian tax rates on them could be as low as 10%, compared to a rate of 39.35% in the UK. It’s a legal practice, but the morality of Ms Murty’s decision was questioned given that - until April at least - she was living full-time in the Chancellor’s grace and favour Downing Street flat.
In a statement released after the story broke, her spokesperson said she had opted for the status because she’s an Indian citizen and “India does not allow its citizens to hold the citizenship of another country simultaneously”. Ms Murty was then backed up by her husband in an interview with The Sun, during which he argued she had the status so she could one day return to India to care for her parents.
However, citizenship has no bearing on where you choose to pay taxes. With pressure building on Sunak in the wake of revelations over him and his wife holding green cards, Ms Murty announced on 8 April that she would pay UK taxes on all her global income. She said did not want her tax status to be a “distraction” for her husband, and added that she understood “the British sense of fairness”.
However, Labour has called for Ms Murty to pay back what she has previously saved on UK tax - a figure that could be £20 million. It has also called into question Rishi Sunak’s decision to raise taxes for people across the country while his family was making tax savings.
In an interview with The Guardian, Sir Keir Starmer accused Sunak of “rank hypocrisy” and said the then-Chancellor was “completely out of touch” with voters. The Daily Mail also quoted anonymous senior Conservative MPs as saying Sunak’s reaction to the leaks lacked maturity and was “petulant and naive”.