Akshata Murty’s non-dom status is a choice, not an obligation – tax experts | Taxes and expenses
This is the government form Chancellor Akshata Murty’s wife will have filled out to apply for non-domiciled status to avoid paying UK tax on tens of millions of dividends collected from India’s IT empire of his family.
When it was revealed on Wednesday that Murty was not domiciled and therefore not liable to pay UK tax on around £11.5million in annual dividends from his Infosys stake, his spokeswoman said said Murty “is treated as not domiciled for UK tax”. purposes” suggesting that she had no control over her tax status in the UK.
However, all UK residents must actively apply for non-dom status by completing government tax form SA109 to claim the tax relief.
Murty’s spokeswoman suggested that because Murty was an Indian citizen, she could not also hold British citizenship and should therefore be treated as a non-dom for British tax.
Akshata Murty is a citizen of India, the country of her birth and the home of her parents. India does not allow its citizens to simultaneously hold the citizenship of another country. Thus, under UK law, Ms Murty is considered not domiciled for UK tax purposes. She still has and will continue to pay UK tax on all her UK income.”
However, several leading international tax experts have disputed this and stated that tax domicile status is unrelated to a person’s nationality. People residing in the UK do not need a UK passport to pay UK tax, meaning Murty could have paid UK tax at any time.
Richard Murphy, professor of accounting at the University of Sheffield School of Management and campaigner for tax justice, said: “Domicile has nothing to do with a person’s nationality. It also has nothing to do with not being able to have a UK passport because a person holds the citizenship of another country. And the non-domiciled status is certainly never granted for this reason.
Murphy said non-dom status was only granted to people who applied for it. “In this case, the implication in Ms Murty’s statement that she should be treated as non-domiciled is simply false. She is not domiciled only because she requested it.
“She can also renounce at any time the claim of not being domiciled,” he added. “Just because she wasn’t domiciled when she came to the UK as a newly married person doesn’t mean she has to keep her status now. So the fact that she’s still non- dom is also a choice.
Arun Advani, an assistant professor in the economics department at the University of Warwick and an expert in non-dom tax law, said: “Citizenship has nothing to do with whether or not you choose to claim the basis of payment in the UK.”
How much tax should Murty have had to pay?
Murty’s spokeswoman said she had paid tax on the dividends she receives from her Infosys stake, which is estimated to be around £690m, but declined to say how much or in which country she paid the tax.
Last year it received dividends of £11.6m. As a higher rate taxpayer, she would have had to pay 38.1% tax on the payment, which equates to £4.4million. Sunak has since increased the rate to 39.35%.
Where does it pay taxes on its Infosys dividends?
Many countries do not levy any tax on dividend payments. If Murty received the dividend in one of these countries, that means she could have “paid” all the taxes owed even if there was no tax owing.
She previously received other dividend income through the tax haven of Mauritius, which does not tax dividends.
Robert Palmer, executive director of campaign group Tax Justice UK, said: ‘Ordinary people facing an increase in their National Insurance contributions this week will be shocked to learn that the Chancellor’s own wife is a non -dom. This status could potentially save him substantial amounts of tax.
“Taxation is a matter of political choices. The government should close tax loopholes such as non-dom status and make sure those with wealth pay their share.
Murty is said to have lived in the UK for nine years, and her team suggested she would be “automatically considered domiciled after living in the UK for 15 years”. Experts said Murty could choose to be domiciled in the UK at any time and he chose not to be domiciled by completing Form SA109 each year.
In addition, non-UK domiciled people have since 2017 had to pay an “annual fee” of £30,000 for status rights “if you have been here for at least seven of the previous nine tax years”. His spokeswoman did not respond to requests for comment on whether Murty is paying the royalty.
Boris Johnson declined to answer questions about Murty during a visit to Somerset this morning, saying: ‘I think wherever possible in politics it’s a good thing to avoid wives and families in political discussion.”