LBC: Rachel Reeves squirms as caller questions party tax failure
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Rachel Reeves grappled with an LBC caller who questioned the Labour Party’s failure to prevent the exploitation of non-domicile status for tax avoidance. The MP for Leeds West confirmed that “parties of different colours” had failed to restrict the tax loopholes of non-dom status amid controversy surrounding Rishi Sunak’s wife, Akshata Murthy. The LBC caller questioned why “Labour didn’t choose to change it when they had the opportunity.”
Ms Reeves agreed the existing regulations surrounding non-dom status in the UK are not necessarily “fair and right” and previous government efforts to close loopholes were “not enough”.
The Shadow Chancellor for the Exchequer claimed “it should be about where you’re living, not where your dad was born.”
The debate surrounding non-dom status has been sparked by recent allegations of tax avoidance levied at Akshata Murthy, the Chancellor’s wife.
Ms Murthy, daughter of an Indian billionaire, has avoided paying millions in UK income tax through the privilege of her non-domicile status.
Ms Reeves explained Ms Murthy, whose father was born abroad, is entitled to claim non-dom status for “tax purposes,” which exempts foreign income.
Ms Reeves struggled to address caller accusations that Labour had “chosen not to change” the regulations surrounding non-dom tax benefits when they held power.
The Leeds West MP highlighted non-dom status has been a longstanding system in the UK “since 1799.”
Reeves focused on the intention of non-dom applications as she explained the status “isn’t something you’re just lucky to qualify for,” as individuals must “deliberately choose” to enact the tax scheme.
She continued: “this is something that people are proactively choosing to do.”
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The claims made by the Shadow Chancellor suggested the issue of tax avoidance lies not within the existence of non-domicile status but rather with the intention of individuals who apply for the system to protect personal wealth.
She explained non-dom status is “not automatic” for those entitled to claim and individuals must actively gain approval before they can reap the benefits of low taxation.
Chancellor Rishi Sunak has recently come under fire after leaked information detailed the non-dom status of his wife, Murthy.
Under non-domicile status, Murthy has avoided paying UK income tax on an estimated £11.5m annual income earned through stakes in her father’s IT business.
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Since the storm of allegations surfaced, Murthy has announced she plans to revoke her non-dom status and pay UK taxes on her foreign income.
Murthy was entitled to claim non-domicile status as her father was born in India and she retains her own Indian citizenship.
The revelations sparked outrage across the nation as the reports coincide with a sharp rise in the cost of living across the UK.
In a pivotal time for the population, the current UK inflation rate has reached the highest peak since 1992, as households struggle to cope with increasing energy costs and rising national insurance contributions.
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