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?

@tigger1001

"She isn't paying the same at all. If I had a million pound income in India I would be paying UK tax on it, she isn't."

But that's because, I assume, you are both uk resident and domiciled. You would also be free to spend the money in the uk.

She has a choice written in law. She will pay £30,000 for the privilege but won't be able to bring the money nor assets bought with the money into the uk without tax charge

She is resident in the UK and so morally she should pay her share not apply for a status (which seems dubious) that allows her to avoid it.

Rather than blaming the Sunaks, the tax laws are to be blamed and need to be overhauled. Mrs Sunak has not broken any laws.

It may be immoral or unethical but it’s not illegal.

I have an under active thyroid. All my prescriptions are free as a result, not just the thyroxine. Of course I don’t pay, but actually I can well afford to. Tbh I think it would be fairer if they continued giving me the thyroxine for free and charged me for everything else. Ok it’s nowhere near the scale of Mrs Sunak’s millions but it’s similar. I’m a community mental health nurse and during the first lockdown spoke to a patient who the GP was concerned hadn’t been collecting his meds (antidepressants, statins and anti hypertension meds) . He was a self employed painter and decorator but had not been self employed long enough to qualify for the government grants during lockdown. He had put in a UC claim but while waiting for it to come through was on the bones of his arse and had to make cutbacks and his prescriptions was the first. I felt really bad collecting my free prescriptions knowing I could actually afford them when he didn’t qualify and had to stop taking them as a result.

@Spidey66

Rather than blaming the Sunaks, the tax laws are to be blamed and need to be overhauled. Mrs Sunak has not broken any laws.

It may be immoral or unethical but it’s not illegal.

I have an under active thyroid. All my prescriptions are free as a result, not just the thyroxine. Of course I don’t pay, but actually I can well afford to. Tbh I think it would be fairer if they continued giving me the thyroxine for free and charged me for everything else. Ok it’s nowhere near the scale of Mrs Sunak’s millions but it’s similar. I’m a community mental health nurse and during the first lockdown spoke to a patient who the GP was concerned hadn’t been collecting his meds (antidepressants, statins and anti hypertension meds) . He was a self employed painter and decorator but had not been self employed long enough to qualify for the government grants during lockdown. He had put in a UC claim but while waiting for it to come through was on the bones of his arse and had to make cutbacks and his prescriptions was the first. I felt really bad collecting my free prescriptions knowing I could actually afford them when he didn’t qualify and had to stop taking them as a result.

Maybe if millionaires didn't use tax loopholes everyone could have free prescriptions.

Mr Sunak knows about the loopholes and he is in a position to correct it, he chooses not to.

Some PPs are just being mean and inconsistent. People complain about the rise in NI. And fuel duty. Then when UK tax is lower for non-doms than marginal tax rates for UK residents then they're up in arms. Don't people see the value in lower tax rates. Look forward to the tax cut in 2024?/just before the election when apparently there will be more certainty than the highly uncertain fiscal and energy price position over the next six months.

@EstelleCostanza

It’s not a technical matter. The principle is you pay taxes in your country of domicile plus on any income you bring onshore in the uk. I also find the assumption that we should get the tax take rather than India pretty repellent. Why re our entitlements greater?

I agree on this.

@ancientgran

Didn't some people do that a few years back and then the taxman caught up with them, clarified the rules and they had to repay the money? I can't remember the details, must have a google.

Yes - the loan charge. HMRC applied the law retrospectively. People lost their houses, there have been at least 8 suicides. The difference being that the people involved weren't millionaires and were in many cases tricked or at least misled. As usual HMRC didn't go after Sir Bufton Tufton and his rich mates who peddled the schemes - they came after all the little guys and took all their money because they were an easy target.

This will happen again soon as HMRC is launching a new retrospective attack on contractors, but they only go after the small fry easy targets and never the providers.

Funny how a lot of the work formerly done by contractors is now being exported to be done in India by firms like Infosys - the source of Rishi's wife's wealth.

Don't discriminate against the next PM just because he is unlucky enough to have fallen in love with a billionaire. It could happen to anyone. Where is the romance in your soul?

@Zilla1

Some PPs are just being mean and inconsistent. People complain about the rise in NI. And fuel duty. Then when UK tax is lower for non-doms than marginal tax rates for UK residents then they're up in arms. Don't people see the value in lower tax rates. Look forward to the tax cut in 2024?/just before the election when apparently there will be more certainty than the highly uncertain fiscal and energy price position over the next six months.

You had me there for a minute.

For those calling the domicile tax rules a “loophole” or tax avoidance they are not. A loophole / tax avoidance is generally understood to be a way to save tax which was not intended by parliament when writing legislation.

Non- dom status is an intentional and longstanding part of the UK tax system and there is specific legislation allowing what Sunak’s wife does. It doesn’t sound like she is doing anything “dodgy”.

What people seem to be asking for is that people be charged to UK income tax on foreign income which is never brought to the UK with no credit for foreign tax paid even if they are in the UK only for a few years and intend to return home at some point? That is one position but would be unusual internationally and would likely lose the UK money overall as rich foreigners simply wouldn’t become tax resident in the UK.

I think that before people express outrage they should make sure they understand the tax rules they are criticising and have a proposal for how to reform them.

@Zilla1

Don't discriminate against the next PM just because he is unlucky enough to have fallen in love with a billionaire. It could happen to anyone. Where is the romance in your soul?

Brilliant!

@Chessie678

For those calling the domicile tax rules a “loophole” or tax avoidance they are not. A loophole / tax avoidance is generally understood to be a way to save tax which was not intended by parliament when writing legislation.

Non- dom status is an intentional and longstanding part of the UK tax system and there is specific legislation allowing what Sunak’s wife does. It doesn’t sound like she is doing anything “dodgy”.

What people seem to be asking for is that people be charged to UK income tax on foreign income which is never brought to the UK with no credit for foreign tax paid even if they are in the UK only for a few years and intend to return home at some point? That is one position but would be unusual internationally and would likely lose the UK money overall as rich foreigners simply wouldn’t become tax resident in the UK.

I think that before people express outrage they should make sure they understand the tax rules they are criticising and have a proposal for how to reform them.

Doesn't the USA insist on tax being paid there even if you aren't there and didn't earn it there?

@daimbarsatemydogsbone It's almost like the Conservative Party isn't the party for everyone just the large corporates. it's also unfair to say that Infosys, TCS and the like manipulate the sponsor/visa system by advertising roles below market rates then use the absence of applications to sponsor workers to come over and hollow out the contractor model. Nothing against those workers who come over and take the opportunities though an oddly inconsistent 'hostile environment', depending on whether there is a billion+ company behind the person or just some poor individual who has lived here all their adult lives.

"The BBC are saying she can do this as her father was born in India, is she his chattel instead of her husband's?"

Domicile follows your fathers domicile generally. It doesn't change on marriage any more. Think it was the 1970's that changed.

She pays indian tax on her indian income. If she brings that money into the uk she pays uk tax on it. Any money she earns in the uk she pays uk tax on. Is that correct?

And what people are annoyed about is the tax on the income generated in india is paid in india, and benefits india. You are saying the UK should get that money. Honestly i think she would lose in the press either way. This way you get the press frothing about her taking money out of the mouths of starving british babies. If the situation were reversed no doubt they would be frothing about her taking the money out of the mouths of starving indian babies.

Im not a tory fan, but I am pretty sure the main issue here in the press is that she is an Indian woman who is successful in her own right.

@daimbarsatemydogsbone I expect HMRC will get around to the scheme promoters eventually..... And the organisations who consumed the services and established the policies that required the workers to use these vehicles. Not to say some of the contractors didn't understand what they were doing but not all did.

[quote Zilla1]@daimbarsatemydogsbone I expect HMRC will get around to the scheme promoters eventually..... And the organisations who consumed the services and established the policies that required the workers to use these vehicles. Not to say some of the contractors didn't understand what they were doing but not all did.[/quote]
Of course - the "if it looks too good to be true" rule applies - except if you are a millionaire in which case nothing is too good to be true for you - you can't lose.

@tigger1001

"The BBC are saying she can do this as her father was born in India, is she his chattel instead of her husband's?"

Domicile follows your fathers domicile generally. It doesn't change on marriage any more. Think it was the 1970's that changed.

So much for independent women. Claim to be daddy's little girl if it saves you money.

"She is resident in the UK and so morally she should pay her share not apply for a status (which seems dubious) that allows her to avoid it."

She wouldn't really be paying though as she would get credit for tax suffered in India.

She also hasn't got the benefit of the money in the uk.

It's really not dubious - she can claim non domicile for the time being. It will come to a time she will not be able to claim it.

So before you criticise, try to imagine walking in the shoes of a billionnairess and the everyday difficulties she would face. If you went on holiday to a dozen different countries in a tax year, you wouldn't want to have to pay tax on your dividends in every one of those countries. Living in the UK for a decade is like that multiplied by ten. And having to smile at the neighbours while they plant stories in the press and passing time picking out the new wallpaper if her husband gets a promotion.

The English law of domicile is quite complicated. There is no single test. So I’m not quite sure where the thing about the father comes from.
It is true the US will tax it’s citizens even if domiciled elsewhere. Hence people disclaiming their us citizenship when they don’t fancy paying taxes in a country they gave no intention of returning to

@Toomanyradishes

She pays indian tax on her indian income. If she brings that money into the uk she pays uk tax on it. Any money she earns in the uk she pays uk tax on. Is that correct?

And what people are annoyed about is the tax on the income generated in india is paid in india, and benefits india. You are saying the UK should get that money. Honestly i think she would lose in the press either way. This way you get the press frothing about her taking money out of the mouths of starving british babies. If the situation were reversed no doubt they would be frothing about her taking the money out of the mouths of starving indian babies.

Im not a tory fan, but I am pretty sure the main issue here in the press is that she is an Indian woman who is successful in her own right.

Pretty much. It either goes to India or here.

"So much for independent women. Claim to be daddy's little girl if it saves you money"

Applies to men too. It's a basic principle - domicile generally follows your fathers domicile.

[quote daimbarsatemydogsbone]@ancientgran

Didn't some people do that a few years back and then the taxman caught up with them, clarified the rules and they had to repay the money? I can't remember the details, must have a google.

Yes - the loan charge. HMRC applied the law retrospectively. People lost their houses, there have been at least 8 suicides. The difference being that the people involved weren't millionaires and were in many cases tricked or at least misled. As usual HMRC didn't go after Sir Bufton Tufton and his rich mates who peddled the schemes - they came after all the little guys and took all their money because they were an easy target.

This will happen again soon as HMRC is launching a new retrospective attack on contractors, but they only go after the small fry easy targets and never the providers.

Funny how a lot of the work formerly done by contractors is now being exported to be done in India by firms like Infosys - the source of Rishi's wife's wealth.[/quote]
Yes that is the one I vaguely remembered. So as for "if you boss offered you a scheme where you paid 5% rather than 20%" be wary of this sort of offering.

Yes they should go after the big boys but everyone should pay their taxes and if people didn't pay the correct amount then I think they should pay up, obviously they should be offered a way to do it that is workable for them but I honestly don't see why their lifestyle should be sacrosanct when others pay the going rate.

I don't know if people had to pay penalties and if they did I think they should be able to fight that if they were misled.

@tigger1001

"So much for independent women. Claim to be daddy's little girl if it saves you money"

Applies to men too. It's a basic principle - domicile generally follows your fathers domicile.

But in this case a multi millionaire woman is using the get out.

USA insists that we file, but the tax exempt earnings allowance is pretty generous, maybe $80k now. so yes we have to document our earnings, but most Americans abroad don't end up owing any taxes. Plus we have our usual tax-free-income allowance, maybe $3k now?

Still a hassle to file (!)

UK doesn't seem to apply exemptions on earnings abroad ,from what I can work out. So yes, I was liable to file & pay tax to HMRC for $12.00 earned in interest.