LONDON: UK Chancellor of the Exchequer Jeremy Hunt announced in the Budget on Wednesday that non-domiciled status, the tax status of UK Prime Minister Rishi Sunak’s wife, is to be abolished.
Hunt said the abolition of the tax regime, used by non-UK residents who do not intend to permanently live in Britain, will raise £2.7 billion per year.
Murty was saving up to £20 million annually by having the status and choosing to pay her taxes on a remittance basis, which meant she was exempt from paying UK taxes on any foreign income and gains unless she brought them to the UK.Murty gets dividends from her 0.93% stake in Infosys.
After her controversial tax status came to light in 2022, she announced she would no longer claim the remittance basis and instead pay UK tax on all her worldwide income and gains.
Hunt announced Wednesday that the non-dom tax regime will be replaced with a new system from April 2025, whereby new arrivals will not have to pay taxes on foreign income and gains for the first four years of tax residency in the UK irrespective of whether they bring the money to UK, after which they will have to pay taxes on worldwide income and gains like any UK resident.
Simon Malkiel, partner at Howard Kennedy law firm, told TOI, “Murty will not be eligible for the new regime as she has lived in the UK for more than four years so will have to pay taxes on her worldwide income and gains, as she is already doing, although she could look at putting her shares into an offshore trust.”
He said the new regime would make the UK less attractive to the very rich as they now had only four years with limited exposure to UK taxes compared to 15. “Ultra HNWs may seek to limit their time in the UK to not be UK residents at all,” he said, adding others will look to restructure their affairs to use things like offshore trusts.
“This will not happen until a year’s time and only if the government remains in power as there will be a general election before then,” he added.
Hunt said the abolition of the tax regime, used by non-UK residents who do not intend to permanently live in Britain, will raise £2.7 billion per year.
Murty was saving up to £20 million annually by having the status and choosing to pay her taxes on a remittance basis, which meant she was exempt from paying UK taxes on any foreign income and gains unless she brought them to the UK.Murty gets dividends from her 0.93% stake in Infosys.
After her controversial tax status came to light in 2022, she announced she would no longer claim the remittance basis and instead pay UK tax on all her worldwide income and gains.
Hunt announced Wednesday that the non-dom tax regime will be replaced with a new system from April 2025, whereby new arrivals will not have to pay taxes on foreign income and gains for the first four years of tax residency in the UK irrespective of whether they bring the money to UK, after which they will have to pay taxes on worldwide income and gains like any UK resident.
Simon Malkiel, partner at Howard Kennedy law firm, told TOI, “Murty will not be eligible for the new regime as she has lived in the UK for more than four years so will have to pay taxes on her worldwide income and gains, as she is already doing, although she could look at putting her shares into an offshore trust.”
He said the new regime would make the UK less attractive to the very rich as they now had only four years with limited exposure to UK taxes compared to 15. “Ultra HNWs may seek to limit their time in the UK to not be UK residents at all,” he said, adding others will look to restructure their affairs to use things like offshore trusts.
“This will not happen until a year’s time and only if the government remains in power as there will be a general election before then,” he added.