LONDON — Britain's Chancellor of the Exchequer Rishi Sunak is facing calls to "come clean" on his family's financial affairs after it emerged his wife benefits from a tax-saving scheme.

Akshata Murty has non-dom status, meaning she does not have to pay UK tax on income earned abroad.

Murty, who earns money from shares in an Indian software giant founded by her billionaire father.

Her spokeswoman said she pays all tax due in the UK - but Labour called for "complete transparency".

Sir Keir Starmer said Rishi Sunak had "very serious questions to answer" about his family's finances.

"If it now transpires that his wife has used schemes to reduce her tax, while he's been increasing taxes on working people, that's breathtaking hypocrisy," said the Labour leader.

It "just goes to show just how out of touch this chancellor is" at a time when taxes were increasing for millions of workers, he added.

Liberal Democrat Treasury spokesperson Christine Jardine said: "Sunak now needs to come clean about which country his family pays tax in abroad and if it is a tax haven."

Business Secretary Kwasi Kwarteng defended Sunak, saying it was "completely unfair" to scrutinise the tax affairs of Murty, "who is not a politician".

He also rejected opposition claims that Murty was "sheltering" from UK taxes.

He told BBC Breakfast: "I think she's been very clear, she's been very transparent, the Chancellor's been very transparent, and this non-dom status has been part of the UK tax system for more than 200 years."

When asked about the criticism of Sunak over his wife's tax affairs, Prime Minister Boris Johnson said: "I think it's very important in politics to keep people's families out of it.".

A non-dom is a UK resident who declares their permanent home, or domicile, outside of the UK.

A domicile is usually the country his or her father considered his permanent home when they were born, or it may be the place overseas where somebody has moved to with no intention of returning.

For proof to the tax authority, non-doms have to provide evidence about their background, lifestyle and future intentions, such as where they own property or intend to be buried.

Non-domiciled tax status was introduced in 1799 to protect colonial investments during the time of the British Empire. Those who have it must still pay UK tax on UK earnings but do not need to pay UK tax on foreign income. They can give up their non-dom status at any time by stating on your tax return that you intend to live in the UK and wish to be considered British for tax purposes.

Murty has chosen to be domiciled in India via her father, the billionaire Narayana Murty, which means she doesn't need to pay taxes in the UK on dividends she receives from her stake in her dad's company, thought to be worth hundreds of millions of pounds.

Non-dom status has been a frequent source of political controversy.

Wealthy Conservative politicians, such as former party chairman Lord Ashcroft and environment minister Lord Goldsmith, have faced criticism over claiming it, although Lord Goldsmith has now given up his non-dom status.

Murty confirmed her non-dom status after it was reported by the Independent website on Wednesday.

"Akshata Murty is a citizen of India, the country of her birth and parents' home," her spokeswoman said.

"India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes.

"She has always and will continue to pay UK taxes on all her UK income."

But tax experts have questioned her statement, suggesting that non-dom status is a "choice" that people can give up.

"Domicile has nothing to do with a person's nationality," said Professor Richard Murphy, co-founder of left-wing campaign group the Tax Justice Network.

He added: "Just because a person has Indian citizenship will never automatically grant them non-dom status in the UK."

A resident of the UK would have to actively declare they believed themselves to be eligible for "non-domiciled" status from HM Revenue and Customs.

Asked to confirm this is what Murty did, a government source said: "Her domicile status is a matter of fact/law determined by her specific circumstances (domicile at birth)", but added they would not be commenting further on a private individual's tax status."

The BBC has been told that Murty does pay taxes abroad on her foreign income. It is not clear how much she pays and at what rate.

It is understood that Sunak made the Cabinet Office aware of his wife's tax status as part of his declaration of interests when he first became a minister in 2018. The Treasury was also made aware of the fact in case there were any conflicts of interest.

Murty, who is a fashion designer, was born in India in 1980 and holds an Indian passport.

In 2009, she married Sunak, who became the MP for Richmond, North Yorkshire in 2015. The couple, who have two daughters, have a flat in Downing Street, and own a number of properties in the UK including a £1.5m home in his constituency, and a property in Santa Monica, California.

Murty's father founded the IT services company Infosys which has grown to be one of India's biggest firms and he is now a billionaire.

Murty owns a little under 1% of the shares of Infosys with a value estimated last month of more than £500m. She also has interests in several companies in the UK.

Last month the Telegraph reported Murty would have received £11.6m in dividends from Infosys in the past tax year. Her non-dom status means she would not have had to pay UK tax on those dividends, which is currently charged at a rate of 39.35%.

Her stake in Infosys has come under scrutiny over its operations in Russia following President Vladimir Putin's invasion of Ukraine. The company is now closing its Moscow office.

Mr Sunak last week told the BBC he had found questions about his wife's finances "very upsetting".

The chancellor compared his feelings to those of film star Will Smith, who slapped comedian Chris Rock at the Oscars after he mocked his wife.

The chancellor has himself has faced criticism over last month's Spring Statement, which opposition parties say did too little to address the spiralling cost of living. — BBC