Saturday, April 09, 2022
The ultra-rich Chancellor who lives by his own rules
The Guardian reports that Rishi Sunak’s wife, Akshata Murty, has finally bowed to pressure to pay UK taxes, saying that she has realised many people felt her tax arrangements were not “compatible with my husband’s job as chancellor”, adding that she appreciated the “British sense of fairness”.
She will now pay tax on all worldwide income in future and for the last tax year, but not on backdated income, which could have saved her an estimated £20m of UK tax on foreign earnings from her billionaire father’s Indian IT company.
However, this affair is far from over. There is the whole issue of non-dom status of course, which has nothing to do with the nationality of the person claiming it, and everything to do with being rich enough to buy an exemption from HMRC on tax payable on overseas earnings. In other words it was not a status that Murty accidentally fell into, it was a position she deliberately chose.
And then there is Sunak's own position as a US green card holder, meaning he had declared himself a “permanent US resident” for tax purposes for 19 months while he was chancellor and for six years as an MP.
She will now pay tax on all worldwide income in future and for the last tax year, but not on backdated income, which could have saved her an estimated £20m of UK tax on foreign earnings from her billionaire father’s Indian IT company.
However, this affair is far from over. There is the whole issue of non-dom status of course, which has nothing to do with the nationality of the person claiming it, and everything to do with being rich enough to buy an exemption from HMRC on tax payable on overseas earnings. In other words it was not a status that Murty accidentally fell into, it was a position she deliberately chose.
And then there is Sunak's own position as a US green card holder, meaning he had declared himself a “permanent US resident” for tax purposes for 19 months while he was chancellor and for six years as an MP.
The Guardian adds that they have also discovered the Treasury last week brought in a new low tax scheme that is partly designed to benefit some wealthy non-dom investors – just days before Sunak’s national insurance rise hit millions of working people at the height of a cost of living crisis.
They say that the new laws specifically mention fund manager non-doms as a category of people who can benefit by not having to pay tax on foreign earnings through the new vehicles.
They say that the new laws specifically mention fund manager non-doms as a category of people who can benefit by not having to pay tax on foreign earnings through the new vehicles.
The Treasury had previously claimed Sunak had made no changes to non-dom policy since 2017, raising new questions over whether the Treasury was fully informed about Sunak’s family’s tax arrangements when formulating policy.
While the vast majority of UK citizens are now paying more tax as a result of Sunak's policies, as well as struggling to make ends meet in the face of rising energy bills and price rises, the position of the man who is responsible for this situation should be noted:
UK taxpayers are required to pay a 40% take on inheritance (above £325,000), while non-doms are exempt from the tax. Murty has assets of at least £690m held in Infosys shares, tax charged on this at a rate of 40% would be £276m.
Murty and Sunak also own four properties worth more than £15m in total, and she also holds substantial investments in other companies.
It is understood Sunak and Murty, who own a £5.5m California penthouse holiday home, have donated $3m (£2.3m) to a US university in recent years.
As former Blair spin doctor, Alastair Campbell points out on twitter, it is worth remembering that one of the reasons that Sovereign Individuals like Rishi Sunak were so keen on Brexit, was because the EU was hellbent on cracking down on tax avoidance, offshore activities and non-doms.
Sunak is making the rules for us, but living by the different rules of the privileged, himself
While the vast majority of UK citizens are now paying more tax as a result of Sunak's policies, as well as struggling to make ends meet in the face of rising energy bills and price rises, the position of the man who is responsible for this situation should be noted:
UK taxpayers are required to pay a 40% take on inheritance (above £325,000), while non-doms are exempt from the tax. Murty has assets of at least £690m held in Infosys shares, tax charged on this at a rate of 40% would be £276m.
Murty and Sunak also own four properties worth more than £15m in total, and she also holds substantial investments in other companies.
It is understood Sunak and Murty, who own a £5.5m California penthouse holiday home, have donated $3m (£2.3m) to a US university in recent years.
As former Blair spin doctor, Alastair Campbell points out on twitter, it is worth remembering that one of the reasons that Sovereign Individuals like Rishi Sunak were so keen on Brexit, was because the EU was hellbent on cracking down on tax avoidance, offshore activities and non-doms.
Sunak is making the rules for us, but living by the different rules of the privileged, himself
Comments:
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I confess to being a little bit mystified by this controversy. I'm all in favour of taxes as "the price we pay for civilisation," think the UK's tax take should be increased and should be happy (sic) to pay more taxes myself. However, I don't see why people should pay axes on the same income twice (see my blog: https://keynesianliberal.blogspot.com/.) If Mrs Sunak has paid all the taxes levied in India, on income generated in India (and I have heard and read no suggestions that she hasn't) the I can't see why she should pay taxes again on the same income.
If however, she has pretended that her income is generated in some low tax haven and has avoided Indian taxes, and if there really is a backlog of £20m, then surely that should go to the Indian government who, given the level of poverty there, need it more than we in the UK do, however cash-strapped we pretend to be.
I believe the long-term solution to this problem, if such it is, would be for the international community to get together to ensure that all tax is paid in the economy in which it is generated. That would make a massive contribution to the ending of world poverty
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If however, she has pretended that her income is generated in some low tax haven and has avoided Indian taxes, and if there really is a backlog of £20m, then surely that should go to the Indian government who, given the level of poverty there, need it more than we in the UK do, however cash-strapped we pretend to be.
I believe the long-term solution to this problem, if such it is, would be for the international community to get together to ensure that all tax is paid in the economy in which it is generated. That would make a massive contribution to the ending of world poverty
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