Mr Sunak’s family finances have been in the spotlight since it emerged his wife Akshata Murty had non-domicile tax status, allowing her to legally avoid paying UK taxes on overseas income
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Crisis-hit Rishi Sunak will undergo an investigation by the Prime Minister’s sleaze watchdog as he battles to save his political career.
Downing Street confirmed that Boris Johnson had ordered his ethics adviser Lord Geidt to probe the Chancellor’s conduct after a request from Mr Sunak himself.
Mr Sunak’s family finances have been in the spotlight after it emerged that his wife Akshata Murty had non-domicile tax status, allowing her to legally avoid paying UK taxes on overseas income.
She U-turned on Friday to save her husband’s job by vowing to pay UK tax on her foreign income, which includes an estimated £11.6 million-a-year in shares from the Indian IT giant Infosys – founded by her billionaire father Narayana Murty.
Mr Sunak attempted to defuse the row by asking Lord Geidt to investigate, as he said he was confident he had declared everything properly.
The Prime Minister’s deputy spokeswoman said: “I’m not aware of whether Lord Geidt himself has begun his work.
“But I can confirm that the Prime Minister has agreed to the request from the Chancellor for Lord Geidt to undertake this work.”
Here are some of the questions the Chancellor needs to clear up.
How much has his wife saved in UK tax through non-dom status?
Mr Sunak’s nightmare week began when it emerged that his wife held non-dom status, potentially saving her millions of pounds in tax.
The arrangement, which is legal, allows people who are domiciled abroad to avoid paying UK tax on their overseas income.
Her spokeswoman initially tried to claim it was because she was an Indian citizen but she then admitted that Ms Murty paid the British Government £30,000-a-year to keep the status.
Ms Murty was forced to into a U-turn on Friday and said she would now pay UK tax on her foreign income.
This includes a 0.91% stake in Indian IT giant Infosys, founded by her billionaire father Naranya Murty.
Her share is worth an estimated £700 million and provides around £11.6 million in dividends per year.
Under non-dom rules, Ms Murty was not obliged to pay UK tax on this income – and it is unclear how big her tax bill could have been.
The BBC estimated she would have saved £2.1 million in UK tax based on these figures.
Ms Murty remains domiciled in India where she eventually wants to return.
What did Rishi Sunak declare about it?
Mr Sunak is understood to have declared his wife’s tax status to the Cabinet Office when he first became a minister in 2018.
Sources said the Treasury was also aware, so as to manage any potential conflicts of interest.
However, what happened after he made the declaration is not clear, because its status is not on his public declaration of ministerial interests.
Mr Sunak has asked for Lord Geidt to review all his declarations of interest since he became a minister in 2018 to ensure they had been properly stated.
He said he was confident he had acted appropriately at all times, but his “overriding concern” was that the public should have confidence in the answers.
Guidance to ministers says the list is not “an account of all the interests or financial arrangements held by a Minister or members of their close family”, adding: “Rather it is a list of any such interests, which are, or might reasonably be perceived to be, directly relevant to that particular minister’s public duties.”
Why did he hold a US green card until last year?
Mr Sunak confirmed on Friday that he held a US green card for more than a year while he was Chancellor.
A spokeswoman said he sought guidance ahead of his first US trip in a Government capacity in October – despite taking on the top Treasury job in February 2020.
People with green cards are treated as “lawful permanent residents” by US tax authorities, and it is seen as a step towards full citizenship.
Mr Sunak’s spokeswoman said he filed US tax returns, “but specifically as a non-resident, in full compliance with the law”.
The Sunaks met at Stanford University and worked in the US before moving to the UK to pursue Mr Sunak’s political career.
They are understood to have a holiday home in California.
At a Downing Street press conference, Boris Johnson said he was unaware of Mr Sunak holding a US green card, but stressed that the Chancellor had “done absolutely everything he was required to do”.
Is he a beneficiary in tax havens?
The Independent reported on Friday that Mr Sunak was listed as the beneficiary of trusts set up in the British Virgin Islands and Cayman Islands to help manage the tax and business affairs of Ms Murty’s family interests.
But a spokeswoman close to the Sunak family said: “No-one in Akshata’s family is aware of this alleged trust.
Labor called on Mr Sunak to explain the situation.
Shadow Chancellor Rachel Reeves said: “We need full disclosure now.”
Have you broken the ministerial code?
Labor has accused the Chancellor of breaking the ministerial code, the set of guidelines that top politicians must follow.
It states that outside interests must be reported to the Permanent Secretary of their department.
It is understood Mr Sunak did report his wife’s status to the Cabinet Office and the Treasury was also aware.
The ministerial code says the register of interests “should also cover interests of the minister’s spouse or partner and close family which might be thought to give rise to a conflict”.
Lord Geidt will examine this as part of his investigation. Politicians who break the ministerial code are traditionally expected to resign.