Sunak's wealthy wife exploits tax break to cut UK payments

UK Chancellor of the Exchequer Rishi Sunak's wife, Akshata Murthy, holds non-domiciled status in the United Kingdom, meaning she doesn't pay British taxes on her foreign earnings. The revelation threatens to further damage the chancellor's popularity, which was already plummeting over perceptions that he's not doing enough to help Britons struggling with the cost of living as inflation soars.

Murthy's tax status - first revealed by the Independent newspaper and confirmed in a statement by a spokesperson for her - could potentially save her millions of pounds over many years in UK tax payments. She is the daughter of an Indian billionaire, Infosys co-founder Narayana Murthy, and owns 0.93 per cent of the company's shares, according to Bloomberg data. That's valued at almost US$1 billion at current prices.

Prime Minister Boris Johnson refused to comment when asked about Murthy's tax affairs. While there is no suggestion the chancellor or his wife have broken any laws, the disclosure about her tax affairs buttresses a growing view that Sunak is out of touch with the struggles of ordinary Britons.

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

Non-domiciled status isn't conveyed automatically - it's something people apply for to avoid their worldwide income being taxed in Britain. Under so-called non-dom rules, some have to pay an annual fee of up to £60,000 (S$106,737) depending on the length of time they've lived in the UK. The status also carries the implication that their stay in Britain is not permanent.

Murthy "is a citizen of India, the country of her birth and parent's home", her spokesperson said in a statement. "India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Murthy is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income."

The news is likely to further damage Sunak, who has been losing support of both the general public and within his own Conservative Party after delivering a mini-budget in March that critics said doesn't do enough to tackle a growing cost-of-living crisis. He told the BBC last week that it's "very upsetting" to see criticism of his wife in the press. "It's totally fine for people to take shots at me. It's fair game," he said. "It's very upsetting and, I think, wrong for people to try and come at my wife."

Sunak declared Murthy's tax status to the Cabinet Office when he first became a minister in 2018, and the Treasury was also made aware in order to manage any potential conflicts. Murthy has lived in the UK for 9 years, and after 15 years in the country, will automatically be deemed domiciled in Britain for tax purposes. She pays tax abroad on her foreign income.

On Wednesday, a YouGov poll found that his popularity has slumped in the 2 weeks since he delivered his Spring Statement. His current score of minus 29 - 57 per cent have an unfavourable opinion of Sunak compared with just 28 per cent who see him in a positive light - is the lowest he's ever recorded. That came after a separate survey earlier in the week showed his standing has also fallen among Conservative Party members. BLOOMBERG