This is the government form that the chancellor’s wife Akshata Murty will have filled in to apply for non-domiciled status in order to avoid paying UK tax on tens of millions in dividends collected from her family’s Indian IT business empire.
When it was revealed on Wednesday that Murty is a non-dom, and thereby is not required to pay UK tax on about £11.5m in annual dividends from her stake in Infosys, her spokeswoman said Murty “is treated as non-domiciled for UK tax purposes” suggesting that she had no control over her UK tax status.
However, all UK residents must actively apply for non-dom status by filing in government tax form SA109 to claim the tax relief.
Murty’s spokeswoman suggested that because Murty is an Indian citizen she cannot also hold UK citizenship and therefore must be treated as a non-dom for UK tax.
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”.
However, several leading international tax experts have disputed this and said tax domicile status is not connected with a person’s nationality. Those resident in the UK do not have to have a British passport in order to pay British taxes, meaning Murty could have paid UK tax at any time.
Richard Murphy, a professor of accounting at Sheffield University management school and tax justice campaigner, said: “Domicile has nothing to do with a person’s nationality. Nor does it have anything to do with not being able to have a British passport because a person holds citizenship from another country. And non-domiciled status is certainly never given for that reason.”
Murphy said non-dom status is only given to people who applied for it. “In that case the implication in Ms Murty’s statement that she has to be treated as non-domiciled is simply wrong. She is only non-domiciled because she asked to be so.
“She can also give up the claim to be non-domiciled at any time,” he added. “Just because she was non-domiciled when she arrived in the UK as a newly married person does not mean she has to keep the status now. So the fact she’s still non-dom is also a choice.”
Arun Advani, assistant professor at the University of Warwick’s economics department and an expert on non-dom tax law, said: “Citizenship has nothing to do with whether you choose to/not to claim remittance basis in the UK.”
How much tax should Murty have paid?
Murty’s spokeswoman said she has paid tax on the dividends she collects from her stake in Infosys, which is estimated to be worth about £690m, but has refused to state how much or in which country she paid the tax.
Last year she collected dividends of £11.6m. As a higher rate tax payer she would have been expected to pay a 38.1% tax on the payout which works out at £4.4m. Sunak has since increased the rate to 39.35%.
Where does she pay tax on her Infosys dividends?
Many countries do not charge any tax on dividend payments. If Murty collected the dividend in one of these countries it means she could have “paid” all the tax due even if there was no tax to pay.
She has previously collected other dividend income via the tax haven of Mauritius, which does not tax dividends.
Robert Palmer, executive director of campaign group Tax Justice UK, said: “Ordinary people who face an increase to 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 her substantial amounts of tax.
“Tax is about political choices. The government should end tax loopholes such as non-dom status and make sure that those who have wealth pay their share.”
Murty is understood to have lived in the UK for nine years, and her team have suggested she will “automatically be deemed domiciled after living in the UK for 15 years”. The experts said Murty could choose to be UK domiciled at any point, and is choosing to be non-domiciled by filling in the SA109 form every year.
Furthermore, non-domicile people resident in the UK have since 2017 been required to pay an “annual charge” of £30,000 for the rights to the status “if you’ve been here for at least seven of the previous nine tax years”. Her spokeswoman did not respond to requests for comment about whether Murty pays the levy.
Boris Johnson declined to answer questions about Murty on a visit to Somerset this morning, saying: “I think as far as we possibly can in politics it is a good thing to steer clear of wives and families in political discussion.”