Rishi Sunak's wife leans on non-domiciled status to prune tax outgo in UK

Chancellor of the Exchequer Rishi Sunak’s wife, Akshata Murthy, holds non-domiciled status in the U.K., meaning she doesn’t pay British taxes on her foreign earnings. 

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

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

While there is no suggestion the chancellor or his wife have broken any laws, the revelation about his wife’s tax affairs will add to the perception that Sunak is out of touch with the struggles of ordinary Britons.

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 pounds ($78,000) depending on the length of time they’ve lived in the U.K. The status also carries the implication that their stay in Britain is not permanent.

Slumping Popularity

The development comes at a time when the chancellor Sunak 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.

The chancellor 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 U.K. for nine 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.

Recent missteps by the chancellor seized upon by the British media include wearing an expensive pair of sneakers and filling a small car that wasn’t his own for a photo-opportunity to publicize a cut in fuel duty. In 2020, he was photographed with a 180-pound coffee cup as he finalized plans to prevent mass unemployment at the height of the pandemic. 

On Wednesday, a YouGov poll found that his popularity has slumped in the two weeks since he delivered his Spring Statement. His current score of minus 29 -- 57% have an unfavorable opinion of Sunak compared with just 28% 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.