FOLLOWING reports that Akshata Murty, wife of Chancellor Rishi Sunak, has taken "non-domicile" status as recently as April 2020, it is worth finding out exactly what that means.
Non-domicile status is a legal, yet controversial, means of paying tax on foreign income.
It allows for UK residents who have a permanent home, or “domicile”, abroad to avoid paying tax on foreign income to HMRC.
According to the UK Government, a person’s domicile is usually where their father had his permanent home when they are born. However, if the person has moved to another country and does not intend to return, their domicile can change.
If you have non-domiciled status then you do not pay UK tax on foreign income or gains if both the following apply:
- they’re less than £2,000 in the tax year.
- you do not bring the money into the UK, for example by transferring them to a UK bank account.
However, if your foreign income, or any money you bring into the UK, is more than £2000 a year, it must be reported to HMRC in a self-assessment tax return.
There are two options for foreign income of more than £2000 a year:
- You can pay UK tax on it and claim it back due to being taxed twice on it – The UK Government says that this will usually be refunded either in part or full.
- Only pay tax on the income you actually bring into the UK while paying an annual fee to avoid paying tax on the rest.
This second option is available to people who have lived in the UK for a certain number of years. For those who have lived in the UK for at least seven out of the last 9 years, the fee is £30,000 and £60,000 for those who have lived here for 12 out of the last 14 years.
READ MORE: Business Secretary fails to say where Rishi Sunak's wife pays tax on foreign income
Non-domicile status means that Murty can avoid paying UK tax on rental payments from overseas, income from dividends from foreign investments or bank interest. The status also means Murty does not have to pay UK inheritance tax.
It is unknown how much money Murty may have saved through this status.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here