Rishi Sunak has admitted holding a US green card while chancellor, as his wife has said she will now pay UK tax on her worldwide income.
It follows a Sky News report earlier that the chancellor and his wife Akshata Murty held US green cards – permitting him residence in the country – until more than a year into his time at 11 Downing Street.
Mr Sunak’s spokeswoman confirmed the report, saying he had held a green card while chancellor until around October, having become chancellor in February 2020.
Green card holders must pay US tax on their worldwide income and pledge that the US is their forever home.
“Rishi Sunak had a green card when he lived and worked in the US,” the spokeswoman said.
“Under US law, you are not presumed to be a US resident just by dint of holding a green card. Furthermore, from a US immigration perspective, it is presumed that permanent resident status is automatically abandoned after prolonged absences from the US.
“At the same time, one is required to file US tax returns. Rishi Sunak followed all guidance and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law.
“As required under US law and as advised, he continued to use his green card for travel purposes. Upon his first trip to the US in a government capacity as chancellor, he discussed the appropriate course of action with the US authorities. At that point it was considered best to return his green card, which he did immediately.
“All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”
However, the US Department of Homeland Security website states: “A green card holder is a permanent resident that has been granted authorization to live and work in the United States on a permanent basis.”
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‘I will now pay UK tax’
On Friday evening, Ms Murty released a statement saying she will now pay taxes in the UK and she does not wish her tax status “to be a distraction for my husband”.
She said: “Since arriving in the UK, I have been made to feel more welcome than I ever could have imagined, in both London and our home in North Yorkshire. This is a wonderful country.
“In recent days, people have asked questions about my tax arrangements: to be clear, I have paid tax in this country on my UK income and international tax on my international income.
“This arrangement is entirely legal and how many non-domiciled people are taxed in the UK. But it has become clear that many do not feel it is compatible with my husband’s role as chancellor. I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family.
“For this reason, I will no longer be claiming the remittance basis for tax. 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.”
Mr Sunak’s household arrangements have been in the spotlight this week after it was revealed that his multi-millionaire wife had “non-dom” status, reducing her tax bill.
Pressure has been building on the chancellor since a poorly-received spring statement last month that critics said did too little to address the cost of living crisis – and polls suggest his popularity is plummeting among voters.
Then came a revelation about his £100,000 donation to his old boarding school, Winchester, adding to the focus on his personal wealth and that of his multi-millionaire wife.
Sunak is doing an ‘absolutely astounding job’
Prime Minister Boris Johnson had earlier insisted that Rishi Sunak had done “absolutely everything” required after it was reported he held a US green card for a period while chancellor.
He told a Downing Street press conference: “As I understand it the chancellor has done absolutely everything he was required to do.”
Mr Johnson also denied that Number 10 has been briefing against Mr Sunak over his wife’s non-dom status.
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“If there are such briefings they are not coming from us in Number 10 and heaven knows where they are coming from,” the prime minister told a Downing Street news conference.
“I think that Rishi is doing an absolutely outstanding job.”
However, Labour leader Sir Keir Starmer said that the chancellor must “come clean” about his family’s tax affairs following revelations about his wife’s tax-reducing non-domiciled status.
Chancellor needs to ‘come clean’
Speaking at the launch of his party’s local election campaign in Barnet, north London, Sir Keir said: “What the chancellor needs to do is to just come clean.
“If the chancellor wants to make the political argument to the country that he’s got no alternative to put taxes up at the very time when people are really struggling, prices are up, inflation is up.
“If the chancellor’s family, at the same time, are using schemes to reduce their own household tax, then the public are entitled to know about that.”
He added: “At the moment, it looks to me very much like one rule for them and another rule for everybody else”.