Sunak reveals he paid over £432,000 in tax last year as long-awaited personal documents released
ITV News Political Correspondent Romilly Weeks reports as Rishi Sunak's UK tax documents are released, with him paying £432,493 in one financial year.
Prime Minister Rishi Sunak has published his long-awaited UK tax documents covering the past four years, showing he paid £432,493 in tax in the 2021/2022 financial year.
The release, following a commitment first made by the prime minister during his Tory leadership run last summer, also showed that he paid £393,217 in 2020/2021, and £227,350 in 2019/20.
In 2021/22, Mr Sunak’s income from dividends was £172,415 and from capital gains was £1.6 million. Most of that related to a US-based investment fund listed as a blind trust, according to the summary. His total investment income that year was more than double his MP’s salary of £81,908.
Number 10 published “a summary” of Mr Sunak’s UK taxable income, capital gains and tax paid as reported to HMRC, prepared by accountancy service Evelyn Partners.
Critics were quick to question the timing of the release, which came on a very busy news day in Westminster.
It coincided with the highly anticipated grilling of Mr Sunak’s predecessor Boris Johnson by MPs over whether he misled the House of Commons with his denials about partygate.
It was also on the same day as the Commons voted on Mr Sunak’s new deal on post-Brexit trading arrangements for Northern Ireland.
Labour deputy leader Angela Rayner tweeted: “Wonder why he’s chosen today?”
Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown, said: “Clearly Rishi Sunak has an impressive level of wealth. Over these three years he has made around £411,000 in salary and benefits from his job – which is a fraction of the £4.77 million he has made in total when dividends and capital gains are included. “A US investment fund is responsible for the lion’s share of his income. He has paid over £1 million in tax. However, the fact that he will pay capital gains tax at just 20% (or 28% on any residential property in the fund) means his overall tax bill is much lower than if this was subject to income or dividend tax.”
What have we learnt from the PM's tax returns?
Aside from his income as a politician Rishi Sunak has significant earnings from investments. He earned a total of £1.9 million in the last tax year.
As ITV News Political Editor Robert Peston notes, Mr Sunak appears to have "comfortably double digit millions in assets, in his own right, independent of his very wealthy wife".
Mr Sunak, who is regarded as among the richest ever inhabitants of Downing Street, first pledged to publish his tax returns during his unsuccessful campaign to become Conservative Party leader last summer, in an attempt to put transparency at the heart of his bid.
He repeatedly promised to do so in recent months, and faced continued pressure to release the documents when it emerged Tory former minister Nadhim Zahawi settled an estimated £4.7 million bill with HMRC while he was chancellor.
Understanding tax rates
Income tax rates
Income tax rates
The basic rate of tax is set at 20% and applies to earnings between £12,571 to £50,270. The first £12,570 you earn is tax-free. Every pound you earn above £50,270 then falls under the next tax bracket. The higher tax rate is set at 40%, and applies to every pound earned between £50,271 and £150,000. The additional tax rate, which applies to the highest earners, applies to any income over £150,000. The term 'marginal tax rate' is commonly used to describe other automatic wage deductions, like student loan repayments and National Insurance, to capture the amount docked from a worker's pay.
Dividend tax rates
Dividend tax rates
Dividend taxes apply to the sums paid to investors for owning shares in a company.
There is a £2,000 tax-free allowance tax rate, and then dividends are taxed based on which income tax band you fall under. Earners taxed at the basic rate have dividends taxed at 8.75%, higher rate income taxpayers pay 33.75%, and additional rate taxpayers pay 39.35%.
Government-backed savings schemes such as pensions and ISAs provide separate tax-free allowances for dividends and interest payments.
Capital Gains Tax
Capital Gains Tax
The capital gains tax (CGT) is the tax on the profit generated when you sell something that has increased in value - although some assets can be sold tax-free.
Gifts between spouses, for example, are generally tax-exempt, until they later sell the asset.
Presently, you only have to pay CGT on overall gains above your annual CGT tax free allowance of £12,300, but this will be cut to £6,000 in the new tax year, which begins April 5, 2023, then will be cut again to £3000 from 2024/2025.
If you’re a higher or additional rate taxpayer you’ll pay: 28% on your gains from residential property, and 20% on your gains from other chargeable assets.
Basic rate income taxpayers pay 10% CGT on any gains that still fall within that tax threshold, after personal allowance and any income tax reliefs. That rises to 18% on residential property sales.
Any remaining gains that fall outside the basic income taxpayer threshold attract the higher rates above.
Mr Sunak’s finances also faced scrutiny while he was chancellor, when the “non-dom” status of his wife Akshata Murty was revealed.
The arrangement reportedly saved her millions while the cost of living soared.
Following the controversy, Ms Murty, the fashion designer billionaire’s daughter who married Mr Sunak in 2009, declared she would pay UK taxes on all her worldwide income.
With spells at investment bank Goldman Sachs and as a hedge fund manager under his belt, Mr Sunak was already independently wealthy when he entered politics in his early 30s.
In his first speech as prime minister, he pledged “integrity, professionalism, and accountability at every level” in his government.
Conservative Party chairman Greg Hands defended Rishi Sunak’s high tax bill following its release. It was put to him that the amount the Prime Minister paid in tax – £432,500 in 2021/22 – was about 13 times what most people earn. Mr Hands told ITV’s Peston: “We want to have, in this country, wealthy people paying a lot of tax. “So, I think we should be proud of the fact that people are paying tax in this country and proud of the fact they’re financing our excellent public services.”
Labour backbench MP Richard Burgon tweeted: “The PM is saving huge sums through a tax advantage where capital gains are taxed at lower rates than income.
“I’ve been campaigning to equalise these rates, which would raise £17 billion per year.
“No wonder the PM refuses to do it.”
Tax lawyer Dan Neidle said: “Most of the £400k tax bill comes from the blind fund which doesn’t pay cash to him. So how does he pay the tax bill, given it’s so much more than he earns?”
While prime ministers are not required to make their tax affairs public, David Cameron also released details of his in 2016 after coming under pressure to do so.
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