Chancellor Rishi Sunak’s wife, Akshata Murty, has moved to end the controversy around her financial status by saying she will now pay UK taxes on all her overseas income.
Murty is estimated to be worth hundreds of millions of pounds, and the “non-dom” status exempted her from paying tax in the UK on foreign income.
Some reports suggested the fashion-designer daughter of a billionaire potentially avoided up to £20 million in UK tax.
In a statement, Murty said she did not want her non-dom status to be a “distraction” for her husband.
“For this reason, I will no longer be claiming the remittance basis for tax,” she said.
“This means I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises.
“I do this because I want to, not because the rules require me to.
“These new arrangements will begin immediately and will also be applied to the tax year just finished.”
Earlier, Sunak faced further embarrassment after he admitted holding a US green card while chancellor, amid demands he “come clean” about his finances.
And the chancellor was also hit by claims in the Independent that he has been listed as a beneficiary of tax haven trusts linked to Murty in the British Virgin Islands and Cayman Islands.
In response, a spokeswoman close to the Sunak family said: “No-one in Akshata’s family is aware of this alleged trust.”
Murty confirmed she holds non-dom status after the Independent website revealed the arrangement on the day a national insurance hike hit millions of workers.
Sunak said his wife was entitled to use the non-dom arrangement as she is an Indian citizen and plans to move back to her home country to care for her parents.
He insisted she is not attempting to pay less tax, saying “the dates don’t make a difference”.
Murty is reported to hold a 0.91% stake in Infosys, an IT business founded by her father, and has received £11.6 million in dividends from the Indian firm in the past year.
Non-dom status means she would not have to pay UK tax at a rate of 39.35% on dividends. India sets the rate for non-residents at 20%, but this can fall to 10% for those who are eligible to benefit from the UK’s tax treaty with India.
Public records show Infosys has received more than £50 million in UK public sector contracts since 2015.
Murty pays an annual levy of £30,000 to the UK government to keep her non-dom status, her spokeswoman said.
Earlier, a spokeswoman for Sunak released a statement confirming that he held a green card while chancellor until seeking guidance ahead of his first US trip in a government capacity, in October last year.
The US inland revenue says anyone who has a green card is treated as a “lawful permanent resident” and is considered a “US tax resident for US income tax purposes”.
The spokeswoman said Sunak continued to file US tax returns, “but specifically as a non-resident, in full compliance with the law”, having obtained a green card when he lived and worked in the States.