Rishi's wife does not pay tax (millions!!) on dividends!

[FlowerArranger]

From today's Guardian :

Rishi Sunak’s multi-millionaire wife claims non-domicile status, it has emerged, which allows her to save millions of pounds in tax on dividends collected from her family’s IT business empire.

Akshata Murthy, who receives about £11.5m in annual dividends from her stake in the Indian IT services company Infosys, declares non-dom status, a scheme that allows people to avoid tax on foreign earnings.

www.theguardian.com/politics/2022/apr/06/rishi-sunaks-wife-claims-non-domicile-status?CMP=Share_AndroidApp_Other

Anyone as outraged by this as I am? I mean what the actual fuck?

Presumably by some people’s logic- Indian nationals who live here but who aren’t born here should pay no tax either. ?? I’m pretty sure that’s not the case? Maybe I’m wrong

@Iggly

HMRC website says:

UK residence and tax

Your UK residence status affects whether you need to pay tax in the UK on your foreign income

Non-residents only pay tax on their UK income - they do not pay UK tax on their foreign income

Residents normally pay UK tax on all their income, whether it’s from the UK or abroad. But there are special rules for UK residents whose permanent home (‘domicile’) is abroad

So if she resides in the UK, then she should pay tax on all worldwide income. She can reside in the UK and not be a UK citizen.

So the question is, does she reside in the UK or not? The rules do not depend on what passport you hold.

Residence isn't in question. It's domicile. And as a uk resident but non domiciled tax payer she can elect to pay on arising basis (ie worldwide income) or on remittance basis (ie on uk income and on foreign income remitted into the uk).

I realise it relates to overseas earnings , but I would have thought the dividends to me count as uk income if she is living here ? Is that not the case. Because we aren’t talking normal salary levels here

She is an Indian citizen paying tax on her earnings from an Indian company in India. She has been in this country only since 2015. She is well within her rights to be a non dom here and choose where she pays her tax! You may not like it but she is not doing anything dodgy.

Infosys was started by her mum with her money ( think she sold her jewels to start the business), does a lot of philanthropic work in India and US.
She is probably well connected to her roots, culture, family and is heavily invested in what her parents have achieved in their life time!
Just because she is married to RS does not mean that she should just give these things up.
We are not living in the 18th century!
Even if RS becomes PM, what is the problem if she continues to choose to be an Indian citizen ? Are there any law which forbids it?

@Crikeyalmighty

I realise it relates to overseas earnings , but I would have thought the dividends to me count as uk income if she is living here ? Is that not the case. Because we aren’t talking normal salary levels here

They are dividends paid on shares in an Indian company. So they are Indian income.

@Crikeyalmighty

I realise it relates to overseas earnings , but I would have thought the dividends to me count as uk income if she is living here ? Is that not the case. Because we aren’t talking normal salary levels here

The dividends in question are overseas dividends. And if she elects to be taxed in the uk under the remittance basis she will only be taxed on overseas income she remits to the uk. If she has been uk resident for 7 out of the last 9 years there is a tax charge of £30k to apply the remittance basis rules.

[quote cherryonthecakes]@daimbarsatemydogsbone It was a reference to the previous post asking whether Rishi was really motivated by public service. [/quote]
Even so - he's not doing the job (directly) for the money - even at the 160k or so plus massive tax-free expenses he's entitled to, he must have been making loads more at the banks and Financiers he used to work for - so there has to be another reason.
He's not going to have to worry about money ever, even if they were ever to divorce.

It's fine.

Just join one of those 'feed a family for a quid a day' type groups on fbook. You got this

@Crikeyalmighty

I realise it relates to overseas earnings , but I would have thought the dividends to me count as uk income if she is living here ? Is that not the case. Because we aren’t talking normal salary levels here

Uk income is income made in the uk itself.

@Crikeyalmighty

Presumably by some people’s logic- Indian nationals who live here but who aren’t born here should pay no tax either. ?? I’m pretty sure that’s not the case? Maybe I’m wrong

The question is where the income is sourced. An Indian national living in the UK, who has UK income, (e.g. from a job, or dividends from a UK company) will pay UK tax on that income.

The dividend payments that RS's wife receives are not UK sourced income - they are Indian income.

My understanding was it was is a choice to seek non-dim status. Apologies if that’s incorrect.

If she had been born and raised in the UK, and then taken active steps to ensure she was domiciled elsewhere, then yes, in those circumstances it would be a choice.

But she hasn't. She's an Indian citizen, raised in India, and she hasn't lived long in the UK. She hasn't had to take active steps to be domiciled in India - her domicile is naturally in India.

I love all the Tory politicians being questioned on this implying that it's terribly sexist and intrusive and anyway irrelevant to look into the tax affairs of the chancellor's wife. If Rishi were applying for benefits his wife's finances would be entirely relevant and scrutinised and he wouldn't be allowed any privacy about his relationship status.

You have to wonder about the mentality of people who have inherited millions, or even billions, and are grimly determined to hang onto every penny they can, even though they will never, ever have to go without any luxury. If the chancellor's wife didn't employ any tax avoidance measures would she be wondering what to serve for dinner that didn't need to be cooked in the oven? Would she be desperate for a sunny day because she can't afford to dry her laundry otherwise? It might be legal but the sheer greed of the class that makes the laws is breathtaking.

@Iggly

HMRC website says:

UK residence and tax

Your UK residence status affects whether you need to pay tax in the UK on your foreign income

Non-residents only pay tax on their UK income - they do not pay UK tax on their foreign income

Residents normally pay UK tax on all their income, whether it’s from the UK or abroad. But there are special rules for UK residents whose permanent home (‘domicile’) is abroad

So if she resides in the UK, then she should pay tax on all worldwide income. She can reside in the UK and not be a UK citizen.

So the question is, does she reside in the UK or not? The rules do not depend on what passport you hold.

You completely ignored the bit that says "there are special rules for UK residents whose permanent home ('domicile') is abroad"

Even if RS becomes PM, what is the problem if she continues to choose to be an Indian citizen ? Are there any law which forbids it?

Citizenship and tax residency / domicile are two separate things. You can be an Indian citizen and UK tax resident for decades without having to become a UK citizen. No one is saying she should give up her citizenship of India.

What people are questioning is how well her use of a tax loophole available only to the very wealthy fits with her husband's political ambitions.

She may very well refuse to change her status and not want to pay millions additional tax so her husband can avoid future awkward questions. And that is her right as she hasn't broken any rules. But it could harm his electability as next Conservative leader and makes more of the public aware of their super elite level of wealth. It must make for some interesting conversations at home for them at the moment.

@EmpressCixi

declining to partake in financial contributions they would otherwise be liable for.

This is also factually incorrect.,they are not legally liable to pay these financial contributions (dividend tax) ergo they are not declining to contribute anything beyond what the tax law says. Tell me, if you’re a 20% basic rate taxpayer, and you decided not to pay the higher rate of 40%, does that mean you’re “declining” to pay? When you’re not even liable to pay the higher rate?

If she has to apply for non dom status (I imagine you do apply or how would the tax man know?) then it isn't the same as declining to pay 40% tax if you are a basic tax payer. She has actively sought to pay tax as a non dom.

I don't know if that means she pays more or less tax overall. I think it would be interesting to know that.

@Octomore

My understanding was it was is a choice to seek non-dim status. Apologies if that’s incorrect.

If she had been born and raised in the UK, and then taken active steps to ensure she was domiciled elsewhere, then yes, in those circumstances it would be a choice.

But she hasn't. She's an Indian citizen, raised in India, and she hasn't lived long in the UK. She hasn't had to take active steps to be domiciled in India - her domicile is naturally in India.

If you’re a non UK citizen who chooses to reside in the UK, you have to apply for non-domicile status. The principle is that you’re effectively saying that you’re not putting down roots in the UK, therefore you don’t pay tax on your worldwide income.

HMRC will investigate if they doubt that claim (eg if you actually do live here most of the time, have dependants here etc etc).

That’s why you lose non dom status after 15 years if you’ve lived here that long, because HMRC believe that you clearly have put down roots.

What she has done is technically correct - she’s applied for non dom status.

This is the difference between tax evasion (illegal) and tax avoidance (legal).

Tax avoidance may well be legal but is it right?

As a non UK citizen claiming to not be putting down permanent roots but having a UK chancellor for a husband and many homes in the UK…. Well it’s certainly questionable 🤷🏻‍♀️

You claim non dom status. It isn’t granted.

@Octomore

My understanding was it was is a choice to seek non-dim status. Apologies if that’s incorrect.

If she had been born and raised in the UK, and then taken active steps to ensure she was domiciled elsewhere, then yes, in those circumstances it would be a choice.

But she hasn't. She's an Indian citizen, raised in India, and she hasn't lived long in the UK. She hasn't had to take active steps to be domiciled in India - her domicile is naturally in India.

I don't think that is correct. Non-doms have to specifically apply for a tax exemption on foreign income of more than £2,000, meaning it is not an automatic designation for foreign-born residents or non-citizens.

Is there any information on the taxes she does pay? Infosys had to be shamed kicking and screaming out of Russia. Is it registered in India? Do Rishi or his wife have millions (or billions) offshored?

You completely ignored the bit that says "there are special rules for UK residents whose permanent home ('domicile') is abroad

?
Yes she’s a non - domicile…. So my question is “really”??

Who qualifies as a non-dom resident?
A person with non-dom status is someone who lives in the UK and is tax resident here, but who has their permanent home outside the country. They must demonstrate to HMRC that their domicile – at least for tax purposes – is in another country. Usually their domicile will be the country that their father considered their permanent home when they were born, and to which they intend to eventually return, perhaps when they retire.
Because they are tax resident in the UK, non-doms will typically not be tax resident in their country of domicile, and therefore not liable for tax in either country on their worldwide income.

So she is effectively saying she is only here temporarily. Interestingly non doms are likely to not be tax resident anywhere and so she will not pay tax in the UK or India on that 11 million dividend!

@MullinerSpec

Sorry non-issue for me he's declared everything and its all above board. Its his wife who's earnt that portion of the family money and I'm sure he pays the right tax on money he's earnt.

Its funny how everyone's forgotten about BoJo and his parties, which were illegal.

I might be old but even I can remember more than one thing at a time.

She's being tight lipped on what tax if any was paid on that dividend in India. She also apparently received some other dividends through the 'tax haven of Mauritius'

https://www.theguardian.com/politics/2022/apr/07/akshata-murty-non-dom-status-rishi-sunak-a-choice-not-an-obligation-tax-experts?CMP=ShareiOSAppp_Other

I don’t blame her for efficient tax planning and she is an Indian National so can understand why. However I do feel it must preclude Rishi Sunak from being Prime minister and I think I am surprised he is able to be chancellor.

@Choux

She's being tight lipped on what tax if any was paid on that dividend in India. She also apparently received some other dividends through the 'tax haven of Mauritius'

[[https://www.theguardian.com/politics/2022/apr/07/akshata-murty-non-dom-status-rishi-sunak-a-choice-not-an-obligation-tax-experts?CMP=Share]]iOSAppp_Other

Yes, she is now refusing to clarify where she pays her tax. Sounding dubious.

There are a lot of people on this thread who don’t know the difference between domicile and residency