The wife of the British chancellor of the exchequer is under pressure to stop avoiding tax

2022-07-28 0 By

Bowing to pressure, Akshata Murthy, wife of UK finance minister Rishi Sunak, announced on Thursday that she would stop paying UK tax on her overseas income, hoping her tax status would “not interfere with my husband”.Reuters and other media reported that the British government announced a tax increase in September last year at a time of severe domestic inflation, which caused many Britons to be dissatisfied. The tax increase plan includes a 1.25 percentage point increase in national insurance contributions to 13.5 percent from April this year.Since late March, Murthy’s offshore assets have been under the spotlight for avoiding tax in the UK.Murthy, the daughter of one of the founders of Indian software giant Infosys LTD., owns about 0.9% of the company and earned more than $15 million in dividends last year alone.However, Ms Murthy remains an Indian citizen and has “non-domiciled” status in the UK, which allows her to pay tax on income earned only in or transferred to the UK.In her latest statement, Ms Murthy announced that she would pay UK tax on her global income, including dividends and capital gains, from the 2021-2022 tax year.”I understand and appreciate the British sense of fairness and I don’t want my tax status to interfere with my husband or my family,” she said.Ms Murthy stressed that her previous tax arrangements were “perfectly legal” and that she would continue to make India, not the UK, her residence.Sunak had previously said Murti planned to return to India to care for his parents when they became weak.Britain’s “non-domiciled” status policy, which exempts more than 75,000 British residents, mostly foreigners, from paying tax on overseas income, has drawn criticism from some in the country, Reuters reported. The status has greatly benefited some of the “very wealthy.”Britain’s opposition Labour Party has called for an end to non-domicile status and said Murthy should pay back taxes she avoided in Britain in previous years if she admitted her tax arrangements were “unfair”.In an interview earlier Today, Mr. Sunak stressed that Mr. Murti’s financial investments were independent of his and that questions about his father-in-law and wife were politically motivated.”Trying to smear him [his father-in-law], smear my wife against me, it’s horrible, isn’t it?”Sunak has been seen by some as a “successor” to Prime Minister Boris Johnson for his steady response to the COVID-19 pandemic, but he has been criticised for tax increases, high domestic inflation and his decision not to give up his US permanent resident status until he became chancellor in 2020.Britain’s consumer price index (CPI) has continued to rise in recent months, hitting a 30-year high of 6.2% year-on-year in February, according to data released by the Office for National Statistics on March 23.Britain’s central bank, the Bank of England, expects inflation to be around 8% in the second quarter and possibly even higher in the second half.To ease inflationary pressures, Mr. Sunak announced a series of tax cuts in late March.But Reuters, citing estimates from Britain’s Office for Budget Responsibility, reported that the tax cuts amounted to only one-sixth of the tax increases Sunak announced last year.