Isolated Sunak blasts ‘smears’ against Akshata Murty with allies blaming No10 as it emerges she may have avoided £20m tax bill from stake in firm that has UK public contracts worth £50m
Downing Street was at the centre of political infighting over Rishi Sunak’s wife today as allies of the chancellor accused Boris Johnson and No10 of being behind ‘smears’ about her non-dom status – as it was revealed she may have side-stepped a £20million UK tax bill.
Mr Sunak came out fighting in defence of billionaire heiress Akshata Murty last night, claiming that ‘awful’ attacks on her were politically motivated.
As it emerged that she had legally avoided paying a huge UK tax bill by paying £30,000 a year to register as a non-dom based in India, he insisted she hasn’t ‘done anything wrong’ while accusing his critics of ‘smearing her to get at him’.
He attacked Labour, which has criticised her tax arrangements. But his allies laid the blame at No10, where Boris Johnson has long been seen as worried about the relative popularity of the Treasury boss.
They accused the PM’s team of a ‘political hit job’ designed to make his position more secure. Both No10 and No11 officially played down the suggestion.
The Chancellor has been hit by a massive political backlash over the revelation that Ms Murty is domiciled in India for tax purposes, despite living in a taxpayer-funded flat in Downing Street. It has been claimed her status may have allowed her to avoid up to £20 million in UK tax.
At the same time, the Mirror last night reported that Infosys, the family firm in which she has a £713million stake, has won UK public sector contracts worth £50million. While she plays no role in the running of the business she would get a share of profits made in the UK by the India-based company.
Shadow attorney general Emily Thornberry today accused Ms Murty of ‘taking advantage’ of her decision to claim non-domicile status to avoid paying taxes.
The politician told BBC Radio 4’s Today programme: ‘In the end, we have somebody who’s been living here for eight years, raising her children here, living at … Downing Street in accommodation provided by the taxpayer and aspiring to be the wife of the next Prime Minister, and yet she says that she isn’t a permanent resident of this country.’
Tory MPs have also been noticeably silent over the issue, with few coming out publicly to back the Chancellor. One minister even suggested to the Times that Mr Sunak might have to quit, saying: ‘I don’t think it’s sustainable. More and more will be revealed about the family’s finances.
‘I don’t think he has Boris or (Tony) Blair’s ability to ride out the worst circumstances. His wife is a non-dom billionaire and the questions are only going to get more difficult.’
However minister Greg Hands today suggested that there could be a racial element to the criticism, telling the BBC: ‘Some of the commentary about her being a foreign national has been unpleasant.’
Miss Murty, 42, was forced to make an embarrassing climbdown yesterday over initial suggestions that her non-dom status was an automatic product of her Indian citizenship. A spokesman acknowledged that she had taken a ‘decision’ to apply for non-dom status, for which she pays a flat fee of £30,000 a year.
Although she pays full UK tax on earnings in this country, her status means she pays only ‘international tax’ on money earned abroad provided it stays there, including dividends from her £713million stake in Indian tech giant Infosys, founded by her father.
Tax experts said last night the status could ultimately be worth as much as £300million to the Sunak family.
However, the chancellor came out fighting last night, slamming his wife’s critics, while his allies pointed the finger at No10 for a ‘political hit job’.
He told the Sun: ‘I’m an elected politician. So I know what I signed up for. It’s different when people are trying to attack you by coming at your family and particularly your wife. It’s unpleasant, especially when she hasn’t done anything wrong.’
He added: ‘Every single penny that she earns in the UK she pays UK taxes on, of course she does. And every penny that she earns internationally, for example in India, she would pay the full taxes on that.
‘What it comes down to is, my wife was born in India, raised in India. Her family home is in India, she obviously has a very close connection. She has investments and a career independent of me.
‘It wouldn’t be reasonable or fair to ask her to sever ties with her country because she happens to be married to me. She loves her country. Like I love mine, I would never dream of giving up my British citizenship. And I imagine most people wouldn’t.’
An ally explained: ‘It feels like there’s a full-time briefing operation against him. This is a hit job, a political hit job. Someone is trying to undermine his credibility.’
Meanwhile, another ally of Mr Sunak has blamed Boris Johnson’s camp for the leaks. ‘It’s all coming from Number 10,’ the source told The Telegraph. ‘Rishi’s the only credible show in town. Ever since he sat down from the Spring Statement, it’s been one thing after the other. I don’t think it’s in anyone’s interest other than the Prime Minister’s.’
A Tory MP added: ‘Number 10 have been gunning for him [Mr Sunak] for a while and undermining him with colleagues.’
In another development, a Sky News report last night claimed that the chancellor and his wife held US Green Cards when he was first appointed to his position. The US government website says the card is only for people who ‘make the US your permanent home’. Mr Sunak is believed to have had the card while chancellor.
The couple have a £5.5million penthouse in California, overlooking Santa Monica pier, which they use in the holidays.
In his defence of his wife, Mr Sunak also hit back at criticism of her family’s wealth, with her father’s company said to be worth around £3 billion.
Mr Sunak told the Sun: ‘These are attempted smears of my father-in-law, who I’m just enormously proud of.
‘That guy came from nothing and has created a world-class business that employs I think about a quarter of a million people around the world and changed the face of India.
‘If I achieved a tenth of what my father-in-law achieved in his life, I’d be a happy person. I’m really proud of what he’s achieved.
Non-dom status has been a feature of the British tax system for centuries and there is no suggestion that Miss Murty has done anything wrong, let alone illegal. But the revelations are embarrassing for the Chancellor in a week when he has raised taxes for millions of working people.
They follow his poorly received mini-Budget, which was criticised for doing too little to tackle the cost of living.
Meanwhile, another report claimed Miss Murty profits from £50million in UK public sector contracts.
She has a stake worth £690m in Indian IT giant Infosys and, since 2016, the firm has earned £15million working for the Care Quality Commission, which is the regulator of UK care homes. In 2019, Infosys also won a £5 million contract with the Medicines and Healthcare products Regulatory Agency, and this year secured a £25 million IT contract from the Tory-run East Sussex County Council.
Publicly, ministers stood by the Chancellor, with Business Secretary Kwasi Kwarteng describing attacks on his wife as ‘malicious’. But privately, some senior Tories said the affair raised serious questions about the Chancellor’s leadership ambitions.
One minister told the Daily Mail: ‘I think that people are surprised about it because you don’t expect the partner of a senior minister to have that sort of tax status.’
A Tory MP said there was ‘a degree of schadenfreude’ among allies of Boris Johnson over the Chancellor’s discomfort.
One former Cabinet minister said Mr Sunak was so weakened politically by recent setbacks that the Prime Minister could even sack him in a summer reshuffle.
‘Rishi went Awol when the PM was in trouble over parties,’ the source said. ‘Boris remembers things like that. I’m not sure I’d bet on him surviving a reshuffle right now.’
Mr Johnson dodged questions yesterday about the Chancellor and his wife, telling reporters: ‘I think it’s very important in politics, if you possibly can, to try to keep people’s families out of it.’
But a senior insider disputed claims there are serious tensions. ‘When you see them together in meetings they complement each other perfectly – they are like a cup and saucer. Of course there are disagreements but they sort them out amicably.’
Allies of the Chancellor, 41, yesterday reacted furiously to ‘unfair’ criticism of his wife, saying that she is not a public figure. One claimed that the information had been leaked by a Labour-supporting mole in Whitehall in an attempt to damage him.
A spokesman for Miss Murty was unwilling to say where she pays tax on her foreign earnings, but played down suggestions she could be using tax havens to minimise her liability, adding: ‘Since it is all above board there is no need for further details.’
It is understood that Mr Sunak declared his wife’s tax status when he became a minister in 2018 and the Treasury was also aware so that any potential conflicts could be managed.
Ms Murty, who is wealthier than the Queen as heiress to her father’s IT firm, is registered as non-domiciled for UK tax purposes, a legal way to avoid paying taxes in Britain on overseas income. The status is often used by the super-wealthy to save thousands or even millions of pounds in tax.
In a short statement Akshata, worth £200million more than a year ago, insisted she pays taxes on all UK income and said the set-up is required because she is an Indian citizen. But a number of tax and accounting experts have disputed this.
The revelations came on the very day that Mr Sunak asked working Britons and their employers to pay an extra 1.25p in every pound for National Insurance.
The bulk of Akshata’s wealth comes from Infosys, the Bangalore-based IT firm founded by her now billionaire father. It is reported she holds a 0.91 per cent stake, around 39million shares, worth about £727million. Experts say this is an increase of more than £200million compared to a year ago, due to a jump in the share price during the pandemic.
But her non-dom status means she was not liable for tax on overseas earnings, including dividends from her father’s company that reportedly came to £11.6million last year. That sum could have meant paying £4.4million to HMRC, according to The Times.
Akshata also owns other investments, including a business that funnels investments through Mauritius. International Market Management is funding the expansion of franchise restaurants in India, including Jamie Oliver’s Italian chain that failed in the UK and US burger brand Wendy’s. This entirely legal structure allows them to reduce taxes paid in India.
The couple have at least four properties. A £1million flat in Kensington, a nearby mews house worth £7million and a £2million mansion in Rishi’s Yorkshire constituency, where he is nicknamed the ‘Maharaja of the Dales’. They also have a £5.5million penthouse in California, overlooking Santa Monica pier, which they use in the holidays.
At meetings with his Treasury team, Rishi Sunak has been known to recite words of wisdom from his tycoon father-in-law, Narayana Murthy.
‘One of my favourite quotes of his is: ‘In God we trust, but everyone else needs to bring data to the table,’ the Chancellor has revealed. ‘It’s something I try to live by … I’m always interested in getting the data, getting the facts.’
Well, a growing chorus now believe it’s time he shared some ‘data’ and ‘facts’ of his own.
Specifically – how many millions in tax might his wife Akshata Murty have saved thanks to her coveted status as a ‘non-dom’ – domiciled abroad for tax purposes but resident in Britain, with all the advantages that life in these islands confers?
Thanks to her oh-so-attractive deal with HMRC, the Chancellor’s wife – unlike you and me – can earn money abroad free of the taxes set by her own husband at No 11.
Capital gains, income, inheritance – you name it, if the cash is earned abroad, the Treasury doesn’t see a penny of tax on it, even though she has made her life here along with her public servant husband.
Yesterday, these extraordinary financial arrangements were met with fury. Sunak himself has hammered ordinary families with manifesto-breaking tax rises, hiking the overall tax burden to the highest since the far-Left government of Clement Attlee after the War – while simultaneously, it appears, standing by as his own family avoided perhaps millions in taxes themselves.
So let’s look at the numbers – and the remarkable lifestyle that being members of the tax-hating super-rich brings the Sunaks.
Miss Murty’s father founded computing firm Infosys in 1981 – and it’s now a £77billion giant. She owns a little under 1 per cent, a stake worth £713million. This sum dwarfs even the Queen’s fortune, which Forbes estimates at £325million. Miss Murty’s family also has a £900million venture with Amazon in India.
Not that Rishi is short of a bob or two. He made a fortune in the hedge fund industry before entering Parliament, and is reputedly worth £200million himself.
The Sunaks have therefore been convincingly dubbed Westminster’s first ‘billionaire couple’: they may enjoy the largest family fortune of any Commons clan since Clive of India’s in the 18th Century.
Last year alone, the Chancellor’s wife enjoyed Infosys dividends totalling £11.6million. Her non-dom status means she avoided the UK’s 38.1 per cent foreign-dividend tax on these – a saving of £4.4million, although she might have paid some tax overseas.
As to her own business efforts, she is now the sole director of Catamaran Ventures UK, which invests in startups, and which she launched with Rishi in 2013 (he transferred his shares to her before becoming an MP in 2015). Her father runs Catamaran’s Indian arm.
Alas, not all Catamaran’s projects have been a success. A private members club, Lava Mayfair Club Ltd, collapsed last year owing almost £44million to creditors, including £374,000 to HMRC. Another venture, education firm Mrs Wordsmith, went into administration last year owing £16.3million – after receiving a £1.3million loan from the Government’s Future Fund.
Miss Murty’s eponymous fashion label, Akshata Designs, folded ignominiously in Britain after three years. She is also a director of a gym chain as well as New & Lingwood, the outfitter that supplies the tailcoats worn by Etonians and which also sells £2,750 silk dressing gowns. (It’s not known to what extent she was personally involved in these businesses.)
Her spokesman had earlier pointed out that India does not allow its citizens to hold dual citizenship, claiming: ‘She has always … paid UK tax on all her UK income.’
However, tax experts raised eyebrows at this, suggesting that non-dom status is a ‘choice’. Professor Richard Murphy, co-founder of the Tax Justice Network, added: ‘Domicile has nothing to do with a person’s nationality.’
Meanwhile, top tax lawyer Dan Neidle suggested that, even if Miss Murty’s fortune is valued at only £500million, her non-dom status could one day save her estate inheritance taxes of £200million.
The timing of these revelations really could not be worse.
Tory MPs, I’m told, were aghast when news of Miss Murty’s tax deal emerged on Wednesday, when a grinning Rishi had stood beside the Prime Minister to defend a punitive national insurance hike.
