Rishi Sunak has admitted holding a US green card while chancellor, as Prime Minister Boris Johnson said he was unaware his Cabinet colleague’s wife holds the tax-reducing non-domiciled status.
Mr Johnson said the chancellor is doing an “outstanding job” on Friday and denied damaging leaks about the Sunaks’ tax affairs were coming from within No 10.
Mr Sunak, an MP since 2015, released a statement admitting to holding a US permanent resident card until October, 12 months after becoming chancellor, in February 2020.
He has been under intense scrutiny after it surfaced that his wife, Akshata Murty, estimated to be worth hundreds of millions of pounds, holds the non-domiciled status that exempts her from paying tax in the UK on foreign income.
A spokeswoman for the MP for Richmond, Yorkshire, released a statement confirming a Sky News report that he held a green card while chancellor until seeking guidance before his first US trip in a government capacity in October last year.
The US inland revenue says anyone who has a green card is treated as a “lawful permanent resident” and is considered a “US tax resident for US income tax purposes”.
She said Mr Sunak continued to file US tax returns, “but specifically as a non-resident, in full compliance with the law”, having obtained a green card when he lived and worked in the country.
“As required under US law and as advised, he continued to use his green card for travel purposes,” the spokeswoman said.
“Upon his first trip to the US in a government capacity as chancellor, he discussed the appropriate course of action with the US authorities. At that point it was considered best to return his green card, which he did immediately.
“All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”
The prime minister defended Mr Sunak when coming under sustained questioning at a Downing Street press conference alongside German leader Olaf Scholz.
On the green card, Mr Johnson said: “As I understand it, the chancellor has done absolutely everything he was required to do.”
The prime minister denied having knowledge of Ms Murty's tax status and added that No 10 has not been briefing against Mr Sunak, who is seen as the front-runner for any possible Conservative leadership election.
“If there are such briefings, they are not coming from us in No 10 and heaven knows where they are coming from,” Mr Johnson said. “I think that Rishi is doing an absolutely outstanding job.”
Liberal Democrat leader Sir Ed Davey, who had called for Cabinet Secretary Simon Case to investigate the a “huge conflict of interest” of the US residency, implied Mr Sunak should be fired.
“Never mind a green card — it’s time to give Rishi Sunak the red card,” Sir Ed said.
Labour’s shadow chief secretary to the Treasury Pat McFadden questioned why Mr Sunak kept the green card after becoming MP and whether it gave him “any tax advantage”.
Mr Sunak criticised the “unpleasant smears” about his wife’s tax affairs during an interview with The Sun and suggested it was a Labour smear campaign, something the party denies.
But his allies told newspapers they suspect No 10 of trying to undermine him.
The chancellor met his wife while he was studying at Stanford University. They married in 2009 and own a home in Santa Monica, California.
Ms Murty, the fashion-designer daughter of a billionaire, confirmed she holds non-domiciled status after The Independent revealed the arrangement on the day a national insurance increase hit millions of workers.
Mr Sunak said his wife was entitled to use the non-domiciled arrangement as she is an Indian citizen and plans to move back to her home country to care for her parents.
He insisted she is not attempting to pay less tax, saying “the dates don’t make a difference”, amid speculation she potentially avoided up to £20 million in UK tax.
Ms Murty is reported to hold a 0.91 per cent stake in Infosys, an IT business founded by her father, and has received £11.6m in dividends from the Indian firm in the past year.
Non-domiciled status means she would not have to pay UK tax at a rate of 39.35 per cent on dividends. India sets the rate for non-residents at 20 per cent, but this can fall to 10 per cent for those who are eligible to benefit from the UK’s tax treaty with India.
Public records show Infosys has received more than £50m in UK public sector contracts since 2015.
Ms Murty pays an annual levy of £30,000 to the UK government to keep her non-domiciled status, her spokeswoman said.