Labour vows to axe non-dom status for privileged few after Rishi Sunak wife tax row

Shadow Chancellor Rachel Reeves said it ‘simply isn’t right’ for wealthy to benefit from ‘outdated non-dom tax perks’ while ordinary Brits struggle

Labour would abolish non-dom status in the wake of the row over Rishi Sunak benefiting from his wife’s millions while raising taxes on working people.

Shadow Chancellor Rachel Reeves said it “simply isn’t right” for wealthy people to benefit from “outdated non-dom tax perks” while ordinary Brits struggle.

It comes after the Chancellor was embroiled in a major dispute over his wife’s Akshata Murty’s tax affairs when it emerged she was non-domiciled in the UK, saving her from potentially paying millions of pounds in UK tax.

Non-dom status is a legal scheme that allows people domiciled abroad to avoid paying UK tax on their overseas income.

Ms Murty holds a 0.91% stake in Indian tech giant Infosys, founded by her father, worth an estimated £11.6 million per year.

Amid a furious backlash, Ms Murty U-turned and said she would pay tax on her overseas income.

Health Secretary Sajid Javid also admitted he had previously held non-dom status for six years while working as a banker.

Under Labour’s plan, there would be a new tax scheme for people who are living in the UK for short periods so that Britain could continue to attract top international talent, bringing it into line with other major economies like France, Germany and Canada.

Labour would also crack down on the use of hidden offshore trusts that allow people to avoid paying tax here in the UK.

And it would fast track the publication of the much-delayed register of overseas beneficial ownership of property, which is crucial for preventing companies’ true owners from carrying out their tax affairs in secrecy.

According to a party briefing paper, at present 1,900 non-doms who have been in the UK for between seven to 15 years pay a charge to keep their tax avoidance status.

Charges range from £30,000 to £50,000 per annum, raising around £70 million annually for the Treasury.

Ms Reeves said: “As the Tories raise taxes on working people, it simply isn’t right that those at the top can benefit from a outdated non-dom tax perks.

“With Labour, people who make the UK their home will contribute to this country by paying tax on their global income.

“The Prime Minister and Chancellor have spent the last few weeks preoccupied with saving their own skins, and have done nothing to tackle the spiralling cost of living.

“Even worse, they’ve made it harder for working people to make ends meet by hiking National Insurance.”

Labour previously pledged to review the rules under Gordon Brown, and Ed Miliband also vowed to axe the status in 2015.

Mr Sunak’s popularity has tanked in recent weeks following the row over his wife’s non-dom status and the spiralling cost of living crisis.

He also received a Partygate fine for attending a surprise birthday gathering for Boris Johnson in the Cabinet Room in Downing Street in June 2020.

Mr Johnson and his wife Carrie were also fined by the Metropolitan Police over the event.

Mr Sunak’s fine came as a surprise to many in Westminster as he had admitted to being present only due to turning up early for a meeting.

The latest Cabinet league table by Tory bible ConservativeHome put Mr Sunak at the bottom of the table, with a -5.2 approval rating among party faithful.

Last month, he was third from bottom, with a net satisfaction rating of only +7.9.

Mr Johnson did little better, placing third from the bottom with a +6.6 approval rating.

Defence Secretary Ben Wallace topped the chart on +85, followed by Foreign Secretary Liz Truss on +64 and Education Secretary Nadhim Zahawi on +60.