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?

[quote Choux]There are nearly 76k non doms in the UK who are either paying nothing or £30-60k per year for the privilege of saying to HMRC 'you only need to know about my UK income, nothing else'. That's the equivalent of a small - med size town where everyone is (legally) avoiding paying substantial amounts of tax to HMRC. For 15 years each. I don't get why is it allowed to persist other than that these people include some Tory donors.

www.gov.uk/government/statistics/statistics-on-non-domiciled-taxpayers-in-the-uk/statistical-commentary-on-non-domiciled-taxpayers-in-the-uk[/quote]
Absolutely this.

I now think that refusing to say where you pay your taxes is a very bad look in the current climate.

MarshaBradyo so the Perm Sec thought it was all OK? I guess the point of the Code then is not to protect the public's interests and make sure Ministers behave with integrity but to make sure the Government are forewarned about any potentially sticky scenarios.

What a bloody shit state of affairs.

@ClaudineClare

MarshaBradyo so the Perm Sec thought it was all OK? I guess the point of the Code then is not to protect the public's interests and make sure Ministers behave with integrity but to make sure the Government are forewarned about any potentially sticky scenarios.

What a bloody shit state of affairs.

Claudine I just heard all conflicts were declared in the right process and were ok. It was in reading your post I realised it must have meant that clause.

My assumption was it was done at the outset (although that wasn’t mentioned).

This is part of a cleverly targeted smear campaign against Sunak. Make people hate him because he's rich and drag his wife into it too. I'm not a fan, but she's not doing anything illegal and it's not a crime to be rich.

Didn’t Boris pay tax in the US until recently? He wasn’t non-Dom but an American citizen or something?

It is not a crime to be rich but it might mean that a portion of the electorate think you cannot relate to them and that another PM would be better. He'll lose poll ratings because of this.

It's the same thinking that gets Johnson deliberately ruffling his hair before he's on tv and not looking too smartly dressed. He wants to project himself as relatable - just an ordinary guy who has somehow become PM.

@Ginajo

This is part of a cleverly targeted smear campaign against Sunak. Make people hate him because he's rich and drag his wife into it too. I'm not a fan, but she's not doing anything illegal and it's not a crime to be rich.

It isn't a smear if it is true!

[quote Choux]There are nearly 76k non doms in the UK who are either paying nothing or £30-60k per year for the privilege of saying to HMRC 'you only need to know about my UK income, nothing else'. That's the equivalent of a small - med size town where everyone is (legally) avoiding paying substantial amounts of tax to HMRC. For 15 years each. I don't get why is it allowed to persist other than that these people include some Tory donors.

www.gov.uk/government/statistics/statistics-on-non-domiciled-taxpayers-in-the-uk/statistical-commentary-on-non-domiciled-taxpayers-in-the-uk[/quote]
They're also paying for the "privilege" of losing their personal allowances and trapping their unremitted income and gains overseas, meaning they are unable to enjoy any benefit from them in the UK without incurring a tax charge.

The remittance basis has significant downsides which aren't tax-related and when I'm weighing up whether it's better for a client to claim or not there are many factors at play outside of what the liability will be to HMRC.

''India is a country where you can't hold dual citizenship'' .....Not true, you can hold dual citizenship, I know this as a fact, loads of people I know hold both British passports and oci (overseas citizen of India cards).

@Lockheart anyone regular person working here who earns over £100k starts losing their personal allowance anyway. The remittance basis requirement would not be an issue for the Sunaks given their wealth up to the point she moved here. For them there is only upside to her being non dom.

@Ginajo

This is part of a cleverly targeted smear campaign against Sunak. Make people hate him because he's rich and drag his wife into it too. I'm not a fan, but she's not doing anything illegal and it's not a crime to be rich.

It's not a smear campaign because it appears to be true (he's declared his wife's non dom status) but it is about diverting attention away from Partygate and Cost of Living crisis imo.

[quote Choux]@Lockheart anyone regular person working here who earns over £100k starts losing their personal allowance anyway. The remittance basis requirement would not be an issue for the Sunaks given their wealth up to the point she moved here. For them there is only upside to her being non dom. [/quote]
I don't disagree with you on the face of it, but you were making a comment about all non-doms, which is what I replied to, not about the Sunaks specifically.

Many of my clients are very borderline cases when it comes to whether the remittance case is worth claiming.

@magicofthefae

''India is a country where you can't hold dual citizenship'' .....Not true, you can hold dual citizenship, I know this as a fact, loads of people I know hold both British passports and oci (overseas citizen of India cards).

If these people told you they have dual citizenship they are wrong. Despite the name OCI isn't citizenship, it's what you are offered if you renounce Indian citizenship or are a descendant or spouse of someone who has. It's basically a lifelong visa with some added perks but it is categorically not citizenship - you can't vote and you don't get a passport. You still travel on your British one which gets stamped. It was introduced because so many Indians were renouncing Indian citizenship to get western citizenships and then they had no rights (and so no incentive) to go home and especially to remit money back to India. India only allows dual citizenship for minors, once you reach adulthood you must renounce one. There are several countries that do this.

I think the issue may be that they have not been forthcoming whether she pays taxes in India. The suggestion is that the income is going through a tax haven.

I’m not overly angry about this even though I hate the Tories.
However, the Chancellor is in charge of the country’s money so should have a fair idea of what things cost. He knows that his wife is saving money on her taxes. He also knows what that money could do for the country but, as a couple, they have decided they don’t care and would rather hold on to it themselves. I don’t know if they share finances or have separate accounts, but needlessly hoarding money you can’t spend in one lifetime while taking it from people who can’t survive without it is just disgusting,

Always depressing to see how many elitist arselickers are still firmly wedged between the cheeks.

A little heads up to you, no matter how hard and long you lick, you'll never be one of them and will eventually get shat on.

@Choux

The domicile rules were reformed in 2017 so that once you have been UK tax resident for at least 15 of the last 20 tax years you can no longer claim the remittance basis, making you liable for UK tax on your worldwide income.

A charge for using the remittance basis was introduced in 2008.

So the rules are not as favourable to non-doms as they used to be.

But domicile status has been part of the tax system for 200 years and so far as I am aware no government, including a labour government, has ever seriously tried to get rid of it altogether.

Overall, keeping the remittance basis increases the UK tax take because it encourages rich people to live in the UK and therefore pay some tax here. Rich non-doms are inherently mobile and don't usually have to choose to reside in the UK and won't if it drags all of their foreign income into the UK tax net. You might disagree with it but that is the economic rationale. The UK would be very unlikely to be better off if we tried to tax non-doms on all of their worldwide income.

And also the difference between claiming the remittance basis and not is not always that significant because usually the UK gives credit for foreign tax paid before UK tax is calculated. If, for example, you have already paid 40% tax on your foreign dividends you won't usually owe extra UK tax (and as always with tax there are various exceptions to that).

To be fair, I suspect that Sunak's wife is saving a fair amount by claiming the remittance basis as my understanding is that Indian dividend rates are significantly lower than UK rates but it doesn't sound like she's doing anything which would constitute "tax avoidance". She's using the rules in exactly the way in which they are intended to be used. There may also be practical reasons not to create large UK tax liabilities such as exchange control rules in India, though I'm no expert on that i.e. could she actually get the dividends out of India to pay a UK tax bill.

@Thebestwaytoscareatory

Always depressing to see how many elitist arselickers are still firmly wedged between the cheeks.

A little heads up to you, no matter how hard and long you lick, you'll never be one of them and will eventually get shat on.

I don’t agree with you and certainly wouldn’t put myself in that category, however, credit where it’s due you have a way with words

Interestingly then this is a specific uk loophole. I can’t do this in Denmark— all our income is UK earned but as we live over 180 days a year here we have to pay high Danish tax —rather than UK tax - rule here is you live here more than 180 days a year, you pay tax here, regardless where that earned money comes from. I find it disgusting that so many very well off people take advantage of living in the UK but pay next to nothing - whereas the average self employed middle class person has the taxman on him like a ton of bricks if he owes £5000!

@Crikeyalmighty

Interestingly then this is a specific uk loophole. I can’t do this in Denmark— all our income is UK earned but as we live over 180 days a year here we have to pay high Danish tax —rather than UK tax - rule here is you live here more than 180 days a year, you pay tax here, regardless where that earned money comes from. I find it disgusting that so many very well off people take advantage of living in the UK but pay next to nothing - whereas the average self employed middle class person has the taxman on him like a ton of bricks if he owes £5000!

The remittance basis is not a loophole and it's not specific to the UK.

It will certainly be tax avoidance if she isn't even paying tax in India. (And does Rishi have his money offshore too?)

They said on the news that she has no commitment to living in the UK and plans to return to India in the future. I wonder if Rishi knows? She doesn't have that long before her claim to non-dom status will be invalid, so are they planning to divorce or live on different continents, or is Rishi preparing to renounce his UK political career? (Yes, I am being facetious.)

Good point EsmaCannonball. Its all very odd when she has several homes here (but none apparently in India), children in UK schools, spends most of her time here, has several UK companies (which I think have received furlough money?) and of course is married to our Chancellor with clear ambitions to be PM. Its a bit of stretch against this background to say that she doesn't have a commitment to living in the UK.

And do we know for sure she is actually paying full tax in India? There are some comments in the press which seem to indicate she may be using off-shore tax havens for at least some of her income.

What annoys me is that the HMRC is aggressive in closing certain loopholes (e.g. the crackdown on contractors) but not on non-doms who are clearly exploiting the system.

@SundaeSunday100

Good point EsmaCannonball. Its all very odd when she has several homes here (but none apparently in India), children in UK schools, spends most of her time here, has several UK companies (which I think have received furlough money?) and of course is married to our Chancellor with clear ambitions to be PM. Its a bit of stretch against this background to say that she doesn't have a commitment to living in the UK.

And do we know for sure she is actually paying full tax in India? There are some comments in the press which seem to indicate she may be using off-shore tax havens for at least some of her income.

What annoys me is that the HMRC is aggressive in closing certain loopholes (e.g. the crackdown on contractors) but not on non-doms who are clearly exploiting the system.

As I've said a couple of times on this thread, the threshold to obtain a domicile of choice under UK law is HIGH. They don't just consider what your situation is now, they consider whether you truly have an intention to remain indefinitely in your country of choice.

This means it's very very hard for a regular UK citizen like you or me (or fabulously wealthy UK citizens) to bugger off to the Cayman Islands, declare we're not UK domiciled and stop paying UK tax. It also means it's very hard for those coming into the UK to acquire a domicile of choice. We can't apply two different standards of tests to the same legal status.

What annoys me is that the HMRC is aggressive in closing certain loopholes (e.g. the crackdown on contractors) but not on non-doms who are clearly exploiting the system.

HMRC can only enforce the law as it exists. It's the government that makes the law.