LONDON — Rishi Sunak’s multi-million-pound tax affairs were released Wednesday — with timing that cynics suggested guaranteed being overshadowed by Boris Johnson’s Partygate grilling.
The three years’ worth of information relating to his tax returns showed the prime minister made just over £1 million in income and £3.7 million in capital gains between 2019-20 and 2021-22, according to a three-page summary by his accountants.
In the three-year period, the PM paid just over £1 million in U.K. tax.
Sunak had promised last July to publish his tax affairs if he became Tory leader. But the timing of the release — as his predecessor Johnson faced more than three hours of questioning over his account of No. 10 COVID rule-breaking in 2020 — raised eyebrows.
The documents were published just over half an hour before the end of Johnson’s marathon session at the Privileges Committee, which is investigating whether he misled parliament. The hearing had been highly anticipated, inevitably pushing Sunak’s tax affairs down the news agenda.
Deputy Labour leader Angela Rayner asked “why he’s chosen today” to publish, while Shadow Scotland Secretary Ian Murray tweeted: “There must be an awful lot going on today to distract” from it.
Lib Dem Cabinet Office spokesperson Christine Jardine said after months of promises, Sunak had “snuck out” his returns “whilst the world is distracted with Boris Johnson’s Partygate grilling.”
Sunak’s US investment fund
The returns show that more than £4.3 million of Sunak’s income came from one U.S.-based investment fund, far outstripping the £156,163 he made last year as an MP and PM.
The PM — who attended Stanford’s business school and has a penthouse in Santa Monica, California — had come under scrutiny after it emerged he held a U.S. Green Card allowing permanent residence until 2021. This meant he was required to submit a U.S. tax return as well as one in the U.K.
The PM and his wife, Akshata Murty, were named by the Sunday Times’ Rich List last year as the U.K.’s 222nd wealthiest people or families — largely thanks to Murty’s shares in Infosys, the Indian software giant co-founded by her father.
Murty also faced scrutiny for her non-domiciled residence status in the U.K: After public pressure, she announced last April that she would pay U.K. tax on her foreign-derived income.
Sunak’s accountants said Wednesday his previous Green Card status did not affect his tax affairs because he was considered a non-resident for U.S. tax purposes.
He did, however, pay $51,648 in U.S. tax over three years on dividends that came from shares held in that country.
The same income was liable to taxation in the U.K. — but to avoid “double taxation,” any tax paid on overseas income could be claimed back as a credit in the U.K.
Sunak reduced his U.K. tax bill by £65,331 over three years by claiming credits against foreign-paid tax in this way. Some was paid in the U.S. and some in other jurisdictions.
The money from the U.S.-based investment fund — including £172,415 of investment dividends and £1.6 million of capital gains last year — was part of a “blind trust,” meaning the prime minister is not aware of where the money is invested to avoid conflicts of interest.
His accountants wrote: “You are subject to tax in the U.K. on your portion of the income and gains received by this fund, notwithstanding that none of those amounts are distributed to you.”
Tax expert ‘bored’
While it is not the full tax return sent to U.K. authorities, No. 10 will hope the document’s publication will clear up speculation about the PM’s wealth.
The left-wing Labour MP Richard Burgon suggested the PM “is saving huge sums through a tax advantage where capital gains are taxed at lower rates than Income.”
Tax Policy Associates founder Dan Neidle said it highlighted how capital gains were taxed at a lower level than income in the U.K. “Rishi made £1.6m of gains on which he paid only 20% tax – £300k,” he tweeted.
But the expert — whose analysis helped lead to Nadhim Zahawi’s sacking as Tory chairman over his tax affairs — also tweeted that there was “nothing suspicious/weird here that I can see.”
Neidle said Sunak “is doing nothing remotely wrong or improper,” adding: “I am therefore bored, and so are the other tax advisers I’ve spoken to.”
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