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Tories fear Sunak tax row will hurt party at local elections

Conservative MPs on Monday expressed concern that a row about the tax affairs of chancellor Rishi Sunak’s family will hurt the Tories in the local elections on May 5.

Sunak has been under fire after revelations that his wife has enjoyed UK tax perks after securing non-domiciled status in Britain, and that he held a US green card that put him on a potential path to American citizenship. Health secretary Sajid Javid, who preceded Sunak as chancellor, has also admitted he held non-dom status before entering politics.

Several senior Tories privately criticised Sunak’s handling of the row about his wife’s tax status, saying it was likely to damage the party in the local elections. The Conservatives are already braced for losses amid the cost of living crisis and revelations about Downing Street parties held during Covid-19 lockdowns.

One minister said May 5 was “already going to be bad, but there’s no doubt having a chancellor that looks like he’s dodging tax in his own household makes it worse”.

Another member of the government added: “Everyone is primarily concerned about the local elections and the Rishi stuff is making our situation worse. People are already concerned about the cost of living and partygate, but this has handed Labour another way to kick us.”

Some Tories have questioned whether the controversy over the Sunak family’s tax affairs will undermine the chancellor’s ambitions to succeed Johnson as party leader.

One Conservative MP said: “The local elections [in May] will be awful, but at least this way they have someone to blame. Time will tell whether [Sunak] can actually survive all of this.” 

Another Tory MP criticised Sunak’s handling of the controversy, saying: “I loathe the idea of dragging political spouses into the political fray, but clearly non-dom status and a green card and being chancellor doesn’t work. What was he thinking?”

Downing Street said on Monday that Boris Johnson had approved Sunak’s request that Lord Christopher Geidt, the government’s independent adviser on ministerial standards, investigate whether the chancellor has properly declared all his interests since becoming a minister.

Number 10 added that the prime minister had full confidence in Sunak, who said on Sunday he had always followed the rules.

Sunak’s wife, Akshata Murty, last week announced she would pay UK tax on all of her worldwide earnings after it emerged she was a non-dom.

By being a non-dom, Murty, who holds Indian citizenship, was entitled to not pay UK tax on her global income. She owns a stake in Indian technology company Infosys, estimated to be worth more than £500mn, and received £11.6mn in dividend income last year.

The controversy around the Sunak family’s tax affairs has provided a second political hit to the chancellor in quick succession: he was criticised last month for not doing more in his Spring Statement to help Britons with the cost of living crisis.

Rishi Sunak and his wife Akshata Murthy at Lord’s cricket ground in London in August 2021.
Rishi Sunak and his wife Akshata Murthy at Lord’s cricket ground in London in August 2021. © Zac Goodwin/PA

Asked whether he was out of touch with the British public, Sunak said on Monday: “On cost of living, I know it’s difficult for people . . . I want to make sure that we can do, and I can do, everything we can to get through what are some challenging months ahead.”

Labour leader Sir Keir Starmer sought to contrast the behaviour of ministers with the plight of ordinary families contending with the cost of living crunch. “It really is one rule for them and another for everyone else,” he said.

Starmer called on Downing Street to come clean on the tax status of all ministers and their spouses.

Number 10 was unable to say on Monday whether any other ministers had non-dom spouses. MPs are not allowed to be non-doms under British law.

Sunak and his wife said last week that all due tax in the UK was paid by them. The chancellor, who worked in the US before entering politics and has a home in California, relinquished his green card in October last year after consulting with American authorities.

Labour meanwhile raised questions about whether Sunak has overseen any tax changes as chancellor that have benefited people with non-dom status.

Law firm Vinson & Elkins claimed that a tax scheme in February’s finance act could potentially provide benefits to non-doms.

But the Treasury said the scheme was only available to fund managers rather than individuals.

Labour also questioned whether Sunak declared a potential conflict of interest when the Future Fund he set up as chancellor during the pandemic to support start ups provided a £650,000 convertible loan to Mrs Wordsmith, an education company.

Catamaran Ventures, an investment company controlled by Murty, was a minority shareholder in Mrs Wordsmith, which collapsed less than six months after receiving the loan.

Sunak said on Sunday he was confident the review by Geidt would find “all relevant information was appropriately declared”.

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