Rishi Sunak’s multi-millionaire wife is claiming non-domicile status, it has emerged, saving her millions of pounds in tax on dividends collected from her family’s IT empire.
Akshata Murthy, who receives around £11.5million in annual dividends from his stake in Indian IT services company Infosys, declares non-dom status, a scheme that allows people to avoid tax on foreign income.
Murthy, the daughter of the billionaire founder of Infosys, owns a 0.93% stake in the tech company worth around £690m. The company’s most recent accounts suggest Murthy’s stake would have earned it £11.6million in dividends in the last fiscal year.
Under UK tax laws, Murthy’s status as a non-dom would mean she would not have had to pay tax on the overseas company dividend payment. Infosys is headquartered in Bengaluru, India and is listed on the Indian Stock Exchange and the New York Stock Exchange. In contrast, UK resident taxpayers pay 38.1% tax on dividend payments.
A spokeswoman for Murthy said: “Akshata Murthy is a citizen of India, the country of her birth and the home of her parents. India does not allow its citizens to simultaneously hold the citizenship of another country. Thus, under UK law, Ms Murthy is considered not domiciled for UK tax purposes. She has and will continue to pay UK tax on all her UK income.
The Treasury declined to comment.
It comes a day after it was revealed that Sunak and Murthy had donated more than £100,000 to the Chancellor’s former private school, Winchester College.
It is understood that Sunak, the Chancellor, declared his wife’s tax status to the Cabinet Office when he became a minister in 2018, and also raised awareness with the Treasury “in order to manage possible disputes”.
Tulip Siddiq, the shadow economic secretary to the Treasury, said: ‘The Chancellor has imposed tax hike after tax hike on the British people. It is amazing that at the same time, his family was able to benefit from tax reduction programs. This is yet another example of the Conservatives thinking this is one rule for them, another for everyone else.
“Rishi Sunak must now urgently explain how much he and his family saved on their own tax bill at the same time he was raising taxes on millions of working families and choosing to leave them £2,620 a year worse off off.”
Under current law, Murthy will automatically be considered domiciled after living in the UK for 15 years. Murthy, who married Sunak in 2009 shortly after they met while studying for an MBA at Stanford University in Silicon Valley, moved to the UK in 2015.
Non-domicile status, first introduced under King George III in 1799, is legal and can be used to avoid paying UK tax on overseas rental income and bank interest as well as foreign dividends. Non-doms can live in the UK all year round.
The revelation of Murthy’s tax status comes as Sunak’s popularity with voters dips over his handling of the cost of living crisis. Sunak’s net preference is down 24 points since just before his spring statement on March 23, to minus 29, according to a YouGov survey.
It is the lowest favor poll on record for the Chancellor and puts his support below that of Labor leader Sir Keir Starmer (minus 25) for the first time since taking office.
In his spring statement last month, Sunak raised the tax burden on British taxpayers to its highest level since the 1940s, even as the population faces the greatest strain on living standards on record. The Resolution Foundation think tank suggested that Sunak’s package would push 1.3 million people, including 500,000 children, into poverty.
Murthy had previously faced accusations that she was receiving “blood money” dividends from Infosys’ continued operation in Russia despite the invasion of Ukraine. Following mounting pressure, the company announced last week that it was “urgently” closing its office in Russia.
Sunak, who has repeatedly called on British companies to pull out of Russia to “inflict maximum economic pain” on Putin’s regime, declined to comment on his wife’s 0.93% stake in Infosys.
Murthy, whose family business is estimated to be worth around £3.5billion, used the valuable tax status as recently as April 2020 – two months after her husband was tasked with setting taxes for the country, according to two people familiar with her financial arrangements.