Citizenn

Chancellor Rishi Sunak 's wife could save herself £280m in UK tax thanks to a loophole created by a treaty between the UK and India dating from the 1950s.

Akshata Murty has " non-dom" status, meaning she does not have to pay UK tax on Income earned abroad.

Non-dom status " wears off" after 15 years and the person is subject to all tax requirements of a UK Citizen - including on their estate.

But there is an exception for Indian citizens around inheritance tax.

A technicality means that even if Ms Murty agrees to pay UK taxes on her worldwide Income , but retains her non-dom status, she can still benefit from a provision in a 1956 treaty that was designed to stop Indian citizens being double-taxed on their estates in the UK and India.

Ms Murty earns money from shares in an Indian software giant founded by her billionaire father.

India abolished inheritance tax in the 1980s, but this tax exemption was never revoked.

So Ms Murty could have her estate taxed there at zero, rather than in the UK at 40% - saving her £280m on her £700m stake in The Company founded by her father.

Like her current reduced tax rate on her worldwide Income - this would be perfectly legal, and HMT Treasury has said that the chancellor provided all relevant information on his interests when he became a minister.

Nevertheless, the very significant sums Ms Murty could have saved up to Now - and may save in The Future - Pose some awkward questions for Rishi Sunak .

As Chancellor, Rishi Sunak has ultimate oversight of all fiscal matters in the UK. That includes regular reviews of the non-dom rules.

Reviewing rules which directly affect the financial arrangements of his own Family Members seems uncomfortable at best, a direct conflict of interest at worst. Others, including the chancellor's political opponents, have suggested that Mr Sunak should move his power over non-dom policy to another department.

On reported dividends of £11. 5m from £700m worth of shares, Ms Murty would have paid tax at 39. 5% as a UK Citizen , which works out as £4. 5m.

As an Indian Citizen , The Indian government would tax dividends at 20% (a withholding tax). The UK government would tax the difference between that and the UK rate, or 19. 5%. So Ms Murty saves £2. 1m per year through her " non-dom" status.

She has also reportedly received Income from companies based in Mauritius, which enjoys a more favourable tax treaty with India where The Indian government withholds just 15% of dividend Income from Indian companies.

It is not known whether Murty holds these shares through a company based in a Mauritius or any other tax haven.

A spokesperson for Murty said it was possible for someone in her position to use tax havens for Income earned outside the UK.

Labour Party leader Sir Keir Starmer has called for " full transparency" from the chancellor over His Family 's finances.

A spokesperson for Hm Treasury said: " The chancellor provided a full list of all relevant interests when he first became a Minister in 2018, as required by the Ministerial Code.

" The Independent Adviser on Ministers' Interests has confirmed that they are completely satisfied with The Steps the Chancellor has taken to meet the requirements of The Code . "

To be clear, Akshata Murty is not accused of any wrongdoing whatsoever. But someone with preferential tax status living in Number 11 Downing Street does Pose uncomfortable questions for The Other adult Resident .

Source of news: bbc.com