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Rishi Sunak: Why are people angry with the Conservative minister?

rishi sunak speakingImage source, Getty Images

The man who manages the UK's public spending is facing criticism after it was revealed his wife is not paying tax on some of her earnings.

Rishi Sunak, who makes big decisions about how much tax people in the UK pay, has now written to the Prime Minister asking for an investigation into his own actions on the issue.

Mr Sunak's wife, Akshata Murty, has been able to avoid paying tax on any income she gets outside the UK because of a law that protects her money.

But while what Ms Murty did hasn't broken any laws, lots of people are still upset as they think avoiding paying tax is unfair.

The timing of the news comes as millions of people in the UK are currently struggling with money because of a rise in the cost of living.

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What is tax and why does it matter?

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Tax is quite a simple idea but can be complicated in reality!

If an adult or a business in the UK earns a certain amount of money (also known as income), they need to pay a part of that money to the government.

We call this payment tax, and the money is used to help pay for many public services like schools, healthcare and the police.

Some people and businesses in the UK pay more tax than others, depending on how much they earn. Typically the more you earn, the more tax you are expected to pay.

Why has Akshata Murty not been paying tax on some of her earnings?

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Image caption,

Chancellor of the Exchequer, Rishi Sunak, with his wife Akshata Murty

Ms Murty has been able to avoid paying tax in the UK thanks to a law which protects the earnings of people who are non-domicile, often called 'non-dom'.

Non-domicile, or 'non-dom' status is given to people who:

  • Were born outside the UK, or have parents who were born outside the UK

  • Who are over 16 and choose to live outside the UK with no intention of returning

Both of Ms Murty's parents are Indian, and she was born and raised in India, so she has a right to be considered non-dom in the UK.

You can be non-dom even if you live in the UK, as Ms Murty does with her husband Rishi Sunak at No. 11 Downing Street.

If you are non-dom, you do not have to pay tax on any money you have earned outside the UK.

Why are people upset with Rishi Sunak and his wife?

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Image caption,

Prime Minister Boris Johnson has defended Mr Sunak

Akshata Murty is the daughter of a billionaire, who owns a successful software company based in India.

Ms Murty received £11.6 million of income from the company last year.

But because of her status as a 'non-dom', Ms Murty didn't have to pay tax on this money to the UK government. The Â鶹ԼÅÄ estimates she would have avoided £2.1m a year in UK tax.

While this is her right to do so - some people are upset with Mr Sunak as a result.

This is because many people feel it's unfair that Mr Sunak and his family are benefitting from not paying tax while asking lots of people in the UK to pay tax, at a time when there is a big rise in the cost of living.

What does Mr Sunak say?

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Image caption,

Rishi Sunak says he hasn't done anything wrong

Mr Sunak says it is unfair that his wife is being criticised when she hasn't broken any rules and does not have a job in the government and is not a politician.

Since the story emerged in the press, Ms Murty has said she will now pay tax in the UK on her overseas earnings, saying she does not want to be a "distraction" for her husband.

Mr Sunak has written to Prime Minister Boris Johnson, asking for an investigation into his actions by an independent adviser into government ministers' interests.

He says he hopes this will show he has always "followed the rules". A separate investigation has now been launched into how the details of Ms Murty's non-dom status were leaked to the media.

What has the reaction been?

Prime Minister Boris Johnson defended Mr Sunak in a press conference, saying he is doing an "outstanding" job as Chancellor of the Exchequer.

But opposition party Labour have criticised Mr Sunak and his wife's actions.

Shadow transport secretary, MP Louise Haigh, said: "I think the question many people will be asking is whether it was ethical and whether it was right that the Chancellor of the Exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds."