LONDON, April 9 — UK finance minister Rishi Sunak is under pressure after it was revealed that his wealthy Indian wife is sheltered from paying tax on foreign earnings to his Treasury after claiming non-domiciled status.

The "non-dom” scheme has become a controversial issue in British politics in recent years, particularly now that Britons face tax rises and a cost-of-living crisis.

Here is a summary of the rules:

Sunak’s case

Akshata Murty, Sunak’s wife and daughter of the billionaire co-founder of Indian technology group c, does not have to pay UK tax on her substantial overseas earnings after applying for non-dom status.

Murty, whose Infosys shareholding makes her richer than Queen Elizabeth II, has reportedly earned £54.5 million (RM299.5 million) in dividends from her stake in her father’s company since 2015.

History

The status was introduced in 1799 by prime minister William Pitt the Younger to allow wealthy plantation owners in British colonies to shelter their income from taxation back home.

Today it typically applies to foreign-born taxpayers who spend most of their time in the UK but consider their permanent residence to be abroad.

Who qualifies?

An applicant can live in Britain but must demonstrate that their main domicile is another country.

The government generally considers a person’s domicile to be the country that their father considered their residence when the claimant was born.

That status may change if the applicant does not intend ever to live in that country again, but Sunak claims his wife plans to move back to India when her parents are older.

The person cannot claim the status if they have lived in the UK for 15 years or more.

Cost

Taxpayers with non-dom status must apply for an exemption if their overseas income exceeds £2,000.

This comes with a £30,000-a-year charge for those who have lived in Britain for at least seven of the last nine tax years, and £60,000 for those who have been resident for 12 of the last 14 tax years.

Murty moved to Britain with Sunak in 2013, and has had to pay the annual charge to maintain her status.

High-profile cases

Around 113,000 people claimed the status in 2013 — the latest date for which figures are available — and include a number of celebrities, notably from the worlds of film and sport.

The Guardian newspaper cited the examples of Russian oligarch and Chelsea football club owner Roman Abramovich, who was recently hit by UK sanctions in retaliation for Moscow’s invasion of Ukraine, and Indian steel magnate Lakshmi Mittal.

Controversy

The status came under increasing scrutiny more than a decade ago due to a series of cases of wealthy people who were born in Britain claiming to be non-domicile.

They included businessman and Conservative politician Michael Ashcroft, who claimed his domicile was Belize despite taking up a seat in the UK’s House of Lords. — AFP