Rishi Sunak's wife Akshata Murty says she pays all UK taxes after non-domicile status confirmed

ITV News' Libby Wiener explains why Ms Murty's finances are under scrutiny

Rishi Sunak's wife has defended her non-domicile status after it was claimed she could have saved millions of pounds by not paying UK tax on foreign income.

A spokesperson for Akshata Murty said she has always paid UK taxes on her UK income.

Non-dom status means her permanent home is considered outside of the UK. 

And although Ms Murty, who is believed to be worth hundreds of millions of pounds, is still liable for UK tax on income made in this country, she does not have to pay UK tax on foreign income unless it is brought into the UK.

A spokesperson for the chancellor's wife said: "Akshata Murty is a citizen of India, the country of her birth and parents' home.

"India does not allow its citizens to hold the citizenship of another country simultaneously.

"So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes.

"She has always and will continue to pay UK taxes on all her UK income."

The statement comes after The Independent reported that Ms Murty held non-dom status and could have saved millions of pounds in tax on foreign earnings over several years.

The non-dom status is lawful, and it is understood Ms Murty pays foreign taxes on her overseas income.

However, Tulip Siddiq, Labour's shadow economic secretary to the Treasury, said: "The chancellor has imposed tax hike after tax hike on the British people.

"It is staggering that, at the same time, his family may have been benefitting from tax reduction schemes.

"This is yet another example of the Tories thinking it is one rule for them, another for everyone else."

She added: "Rishi Sunak must now urgently explain how much he and his family have saved on their own tax bill at the same time, he was putting taxes up for millions of working families and choosing to leave them £2,620 a year worse off."

It is understood that Mr Sunak declared his wife's tax status when he became a minister in 2018, and the Treasury was aware that potential conflicts could be managed.

Ms Murty is listed on LinkedIn as the director of capital and private equity firm Catamaran Ventures, gym chain Digme Fitness, and gentlemen's outfitters New and Lingwood.

She is also reported to hold a 0.91% stake in Infosys, founded by her now billionaire father.

What is non-domicile status?

UK residents whose permanent home ("domicile") is outside of the UK may not have to pay UK tax on foreign income, according to HM Revenue and Customs (HMRC) guidance.

The same rules apply if you make any foreign capital gains, for example you sell shares or a second home.

"Your domicile’s usually the country your father considered his permanent home when you were born," states the government guidance.

"It may have changed if you moved abroad and you do not intend to return."

What tax do you pay if you have non-dom status?

According to HMRC, you do not pay UK tax on your foreign income or gains if they’re less than £2,000 in the tax year, or you do not bring them to the UK, for example by transferring them to a British bank account.

However, the government states you must report foreign income or gains of £2,000 or more, or any money that you bring to the UK.

You can then either pay UK tax on them, or claim the "remittance basis" which means you only pay UK tax on the income or gains you bring to the UK, but:

• You can lose tax-free allowances for Income Tax and Capital Gains Tax

• Or pay an annual charge of £30,000 if you have been a UK resident for at least seven of the previous nine tax years, and £60,000 for at least 12 of the previous 14 tax years.

However, if you work in both the UK and abroad, you don't have to pay tax on foreign income or gains - even those brought to the UK - if you are entitled to a "foreign workers' exemption".You only qualify for an exemption if:

• your income from your overseas job is less than £10,000

• your other foreign income (such as bank interest) is less than £100

• all your foreign income has been subject to foreign tax (even if you did not have to pay, for example because of a tax-free allowance)

• your combined UK and foreign income is within the band for basic rate Income Tax

• you do not need to fill in a tax return for any other reason