Only five cabinet ministers are prepared to publicly confirm that they and their families do not benefit from the use of tax havens or non-dom status.
Ministers’ financial affairs came under scrutiny after The Independent revealed Rishi Sunak’s wife had used non-dom status to reduce her UK tax burden and documents suggested the Chancellor was listed as a beneficiary of trusts held in tax havens. Health Secretary Sajid Javid has revealed he had non-dom tax status before becoming a politician.
But, questioned by The Independentonly five of Boris Johnson’s 22 cabinet members were prepared to say they had no connection to tax havens and had not used non-dom tax breaks.
Labor said ministers needed to be more transparent about their financial interests.
“We need to know what arrangements the cabinet members have made for themselves. And if there were such arrangements, how were they justified and how much tax was saved? said Pat McFadden, Shadow Chief Secretary to the Treasury.
“It is not a mechanism open to our constituents, who are facing the biggest squeeze on their incomes in decades, made worse by the Chancellor’s decision to impose income tax increases this year.
“The public at least has the right to full information on how many Tory ministers have imposed these hikes and have had non-dom status, or used any other mechanism, including tax havens, that reduce their liability to UK tax.”
Non-dom status and tax havens are both perfectly legal, but their use by ministers has come under question at a time when the government has moved to impose the heaviest tax burden on British families since the 1940s.
Yet some ministers have decided to offer the public a greater degree of transparency. Business Secretary Kwasi Kwarteng, Defense Secretary Ben Wallace and Transportation Secretary Grant Shapps, and their immediate families, do not use tax havens to minimize their tax bills, sources close to them said. The Independent.
Nor have they used non-dom status – a controversial system that has been around for hundreds of years and allows wealthy people to avoid paying UK tax on their overseas earnings.
Education Secretary Nadim Zahawi and his wife are not currently using non-dom status, sources say. However, it is unclear if they have historically used or continue to use tax havens. Meanwhile, George Eustice, the environment secretary, said in a broadcast interview that he would never seek non-dom status.
Separately, a government spokesperson said: “All sitting MPs and peers are automatically deemed to be resident in the UK for tax purposes, by law. In accordance with the Ministerial Code, all Ministers provide information on their tax affairs to the Cabinet Office and the Independent Advisor on Ministerial Interests.
Questions about the financial affairs of Britain’s most powerful politicians arose afterThe Independent revealed that Mr Sunak, the Chancellor, had not made public the advantageous tax status of his wife, Akshata Murty.
Last week, The Independent also reported allegations that Mr Sunak was named in 2020 as a beneficiary of tax haven trusts set up to manage the interests of Ms Murty’s family, which a spokesperson said the couple did not acknowledge not. The same spokesperson did not respond when asked if Mr. Sunak had separately set up his own trust in a tax haven.
In an attempt to draw a line under the controversy, Mr Sunak at the weekend asked Lord Geidt, the Prime Minister’s independent adviser on ministerial interests, to review all his statements since he entered government in 2018. Number 10 said an inquiry would be carried out by Lord Geidt on Monday – but insisted Mr Johnson had ‘full confidence’ in the Chancellor.
Ministers are required to declare the interests of their spouses, as stipulated in the code to which they subscribe when taking office. The decision whether or not to make this information public through registration in the ministerial register of interests is less clear-cut.
The rules allow ministers to place their equity interests and certain other financial interests in a blind trust. This is the position adopted by the Chancellor. However, there is no legal or technical definition of what constitutes a blind trust or its management.
Several serving members of the firm have built successful careers in the financial services industry, including Mr Sunak, who before entering politics worked for the investment firm Theleme Partners, which is registered in the Cayman Islands – a paradise tax – and before that, The Children’s Investment Fund Management. , which is also recorded there.
Some investment companies choose to establish themselves in tax havens because it makes it easier to avoid so-called double taxation – the idea being that it is easier to serve a range of global investors if each pays only one set of taxes in its own jurisdiction, as it comes. when they receive profits paid by an offshore investment fund.
There are, however, other reasons why funds or individuals choose to use tax havens. These can include the significant tax advantages that come with the use of offshore trusts, such as the avoidance of inheritance or capital gains tax, as well as the significant secrecy granted by many tax haven jurisdictions. .
Last Sunday, Mr Javid, also a former financial services professional, shared a statement confirming that he held non-dom status and that before entering Parliament in 2010, he set up an overseas trust , which is now dissolved. A spokesperson declined to say where that confidence was based, but The Independent understands that it was not in the Cayman Islands, where some of his other financial interests were based.
“Clearly Sajid Javid has serious questions to answer about his past tax status and how it was justified,” Labour’s Mr McFadden said.
While working as a banker, Mr Javid was linked to Dark Blue Investments, a benefits trust in which staff received stock bonuses through trusts to avoid tax. The Supreme Court ruled that tax had to be paid on these bonuses.
Experts have questioned Mr Javid’s use of non-dom status, given that he was born in the UK and therefore should have said he had no intention of live in the country long term.
Jacob Rees-Mogg, Minister for Brexit Opportunities, has listed his stake in Somerset Capital Management Limited, an investment firm which operates in the Cayman Islands, on the MPs’ Register of Interests.
A spokesperson for Alok Sharma could not be reached for comment.