'He's In Trouble': Have Rishi Sunak's Tax Controversies Ended His Leadership Hopes?

Revelations about his wife's non-dom status could result in the ultimate fall from grace for the once golden chancellor.
Sunak believes that attacks on his wife's tax affairs are "unpleasant smears".
Sunak believes that attacks on his wife's tax affairs are "unpleasant smears".
Getty Images

At his peak, Rishi Sunak was the most popular politician in the country.

It was a reputation forged after the “crisis chancellor” rose to the challenge of the Covid pandemic — splashing billions on furlough and business support and later the “eat out to help out” scheme to keep the hospitality sector afloat.

Now, the image of Sunak as a sympathetic chancellor who is in touch with the needs of ordinary people appears to be in tatters — and the same could be said of his ambitions to succeed Boris Johnson as prime minister.

Although she was forced into a screeching U-turn on Friday night, the damage to her husband’s reputation was already done.

Meanwhile, the chancellor himself 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.

Pat McFadden, Labour’s shadow chief secretary to the Treasury, said the allegations were “extremely serious”.

“We need full transparency about this and the other stories about the chancellor emerging over the past 24 hours,” he said.

Murty always paid UK tax on any income she earned here, but under the non-dom arrangement, domestic rates did not apply to the vast majority of her foreign wealth, derived from her stake in her father’s Indian company Infosys.

It reinforced the already damaging perception that it’s “one rule for them, one for the rest of us”.

Reports suggest that Murty’s non-dom status, which is perfectly legal, may have allowed her to avoid millions in tax.

Given the fact that her husband has just increased national insurance contributions for working people during the worst cost-of-living crisis in decades, the timing of the revelations could hardly have been worse.

Following Murty’s U-turn, one Labour insider said: “Rishi Sunak has realised that being a total hypocrite doesn’t wash with the British public.”

One former minister admitted to HuffPost UK that the stories emerging about Sunak had put him in “a lot of trouble”.

“It looks like a coordinated campaign and that there will be more to come. Also, there’s not much support being expressed for him publicly.”

Discussing the chancellor’s leadership prospects a few weeks ago, one senior Tory backbencher said that while they liked Sunak, he was not a “political operator” like the foreign secretary, Liz Truss, and questioned whether he had any allies in the Conservative party.

“Who are his allies? I don’t know who they are.”

Chancellor of the Exchequer Rishi Sunak alongside his wife Akshata Murthy.
Chancellor of the Exchequer Rishi Sunak alongside his wife Akshata Murthy.
Ian West via PA Wire/PA Images

Another Conservative said that while the chancellor may be feeling the pain now, it was only just the beginning.

“Everyone is talking about the cost of living,” one Labour source said.

“It’s a massive issue. Rising bills, rising taxes, the cost of food and fuel — the cost of petrol is in the minds of most people you speak to. They can tell you the price they last paid to the half penny.

“The Tories are of course making the chancellor the scapegoat: rule number one in the current Tory party is protect Johnson.

“But voters don’t seem to blame Sunak when you speak to them. They blame the government.

“They know there’s a stink but it’s from a steady and constant flow not from one single burst pipe.”

Sunak was quick to defend Murty’s tax’s affairs, launching a spirited defence of his wife in an interview with the Sun on Thursday evening.

He claimed the couple were the victim of “unpleasant smears” and that those responsible were wrong to target her as a “private citizen”.

“She has had her own career,” he said. “She has her own investments and is paying the taxes that she owes in the UK.

“She is 100 per cent doing everything this country asks of her.”

Some of Sunak’s colleagues rallied to his defence, also suspecting he is the victim of an orchestrated campaign to undermine his credibility.

Alec Shelbrooke, who represents a constituency in Yorkshire, said it was “disgraceful that the chancellor’s wife should change her life, just because of her husband’s job”.

“She hasn’t done anything illegal, she has followed the law, but people are trying to say she should be subservient to her husband’s choices — any feminist attacking her, needs to find a dictionary.

“It’s nasty politics at all levels and its fundamentally sexist. The people attacking are, at best, confused on feminism and inconsistent on tax policy.

“Good smear campaign for them, but vacuous politics.

“Rishi has my full support.”

Another backbencher said: “I think this is quite smeary — Labour looked at non-dom when they were in power and decided to keep it with a fee, which we then jacked up when we were in charge.

But they added: “Notwithstanding that, it’s still politically damaging for him.”

Rishi Sunak places an "eat out to help out" sticker in the window of a business during a visit to Rothesay on the Isle of Bute, Scotland.
Rishi Sunak places an "eat out to help out" sticker in the window of a business during a visit to Rothesay on the Isle of Bute, Scotland.
Jeff J Mitchell - PA Images via Getty Images

What is also worrying for Sunak is the confirmation that he held a US green card for the first 18 months of his role as chancellor.

Green card holders must pay US tax on their worldwide income and declare the US as their permanent residence.

The Liberal Democrats have demanded that the cabinet secretary, Simon Case, open an investigation into the claims and whether Sunak broke the ministerial code.

Sunak’s spokeswoman said: “Upon his first trip to the US in a government capacity as chancellor, he discussed the appropriate course of action with the US authorities,” she said.

“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.”

For some Tories this is where the real danger lies.

Asked whether the constant drip of revelations meant it was all over for Sunak, one former Cabinet minister said: “For his leadership ambitions, certainly, and probably for his current job. The green card stuff is incredible.”

A backbencher added: “Not over non-dom, but if this green card stuff is true, then I expect it is over for him. Probably even as an MP.”

At a press conference on Friday, the prime minister was repeatedly dogged by questions on Sunak’s tax affairs.

Asked whether he was behind the briefings, the prime minister said: “If there are such briefings they are not coming from us in No 10 and heaven knows where they are coming from.”

“I think that Rishi is doing an absolutely outstanding job.”

The question now is whether Sunak can make that case himself to a weary, cash-strapped public who are feeling the pinch like never before.


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