UK Finance Minister Rishi Sunak faces fire over wife Akshata Murthy's non-domicile tax status

British finance minister Rishi Sunak is facing calls to answer and "come clean" after reports emerged that his multi-millionaire wife claims non-domicile status, which let her escape UK taxes on income earned abroad.

Sunak's wife Akshata Murthy, daughter of Indian billionaire NR Narayana Murthy, is apparently able to save millions of pounds in tax on dividends, which are collected from her family's IT business.

Several politicians in the UK have reacted and asked Sunak to answer after a report on Ms Murthy's tax status was published by The Independent newspaper on Thursday.

The Labour leader Keir Starmer said Sunak had "very serious questions to answer" about his family's finances. He said, "If it now transpires that his wife has used schemes to reduce her tax, while he's been increasing taxes on working people, that's breathtaking hypocrisy."

Tulip Siddiq, a lawmaker and Treasury spokeswoman in the opposition Labour Party, said Sunak should say whether he had benefited from his wife's tax status.

Meanwhile, a spokeswoman for Murty said: "Akshata Murty is a citizen of India, the country of her birth and parents’ home. India does not allow its citizens to hold the citizenship of another country simultaneously."

"So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income," the statement added.

What is non-domicile status?

In simple meaning, the country of domicile means the country where a person permanently resides in. If we talk about British law, those with non-domiciled status are not liable to pay taxes on income earned abroad.

A person's domicile is usually the country which their father considered his permanent home when the person was born, although this can change if the person plans to permanently live in Britain.

In Akshata's case, she is legally entitled to claim the status, but it raises a political issue as she is ultimately declaring that the UK is not her permanent home.

She will be treated as UK-domiciled for tax purposes, and liable to be levied on foreign income, once she has lived in the UK for 15 years, in six years.

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(With inputs from agencies)