Just five cabinet ministers are prepared to confirm publicly that they and their families do not benefit from the use of tax havens or non-dom status.
Ministers’ financial affairs have come under scrutiny after The Independent revealed that Rishi Sunak’s wife had used non-dom status to lower her UK tax burden and documents suggested the chancellor was listed as a beneficiary of trusts held in tax havens. Health secretary Sajid Javid revealed that he had held non-dom tax status before becoming a politician.
But, when questioned by The Independentonly five of the 22 members of Boris Johnson’s cabinet were willing to say that they did not have links to tax havens and that they had not used non-dom tax breaks.
Labour said ministers needed to be more transparent over their financial interests.
“We need to know what arrangements members of the cabinet 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.
“This 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 increases in income taxes this year.
“The very least the public has a right to is full information on how many Conservative ministers imposing these rises have had non-dom status, or used any other mechanisms, including tax havens, which reduce their tax liability in the UK.”
Non-dom status and tax havens are both entirely legal, but their use by ministers has been called into question at a time when the government has decided to impose the heaviest tax burden on British families since the 1940s.
Still, some cabinet ministers have decided to offer the public a greater degree of transparency. Business secretary Kwasi Kwarteng, defence secretary Ben Wallace, and transport secretary Grant Shapps, along with their immediate families, do not use tax havens to minimise their tax bills, sources close to them told The Independent.
Nor have they used non-dom status – a controversial system that has been in existence for hundreds of years and allows wealthy individuals to avoid paying UK tax on their overseas income.
Education secretary Nadim Zahawi and his wife do not currently use non-dom status, according to sources. However, it is unclear whether 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 MPs and sitting peers are automatically deemed to be resident in the UK for tax purposes, by law. In line with the ministerial code, all ministers provide information about their tax affairs to the Cabinet Office and independent adviser on ministerial interests.”
Questions over the financial affairs of the UK’s most powerful politicians have arisen after The Independent revealed that Mr Sunak, the chancellor, had not made the beneficial tax status of his wife, Akshata Murty, public.
Last week, The Independent also reported allegations that Mr Sunak had been named in 2020 as a beneficiary of tax haven trusts set up to manage interests of Ms Murty’s family, something a spokesperson said the couple do not recognise. 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 requested over the weekend that Lord Geidt, the prime minister’s independent adviser on ministerial interests, review all his declarations since entering government in 2018. No 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 their spouses’ interests, as enshrined in the code they sign up to when they take office. The decision about whether or not this information is made public by being listed in the ministerial register of interests is less clear cut.
The rules allow for ministers to put their shareholdings and some other financial interests into 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 cabinet members have built successful careers in the financial services industry, including Mr Sunak, who before entering politics worked at investment company Theleme Partners, which is registered in the Cayman Islands – a tax haven – and prior to that The Children’s Investment Fund Management, which is also registered there.
Some investment companies choose to base themselves in tax havens as it makes it easier to avoid so-called double taxation – the idea being that serving a suite of global investors is easier if each just pays one set of taxes in their own jurisdiction, as and when they get paid profits by an offshore investment fund.
There are other reasons, however, why funds or individuals choose to use tax havens. These can include the considerable tax benefits that come from using offshore trusts, such as avoiding 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 had held non-dom status, and that, prior to entering parliament in 2010, he had created an overseas trust, which is now dissolved. A spokesperson declined to say where this trust was based, but The Independent understands it was not in the Cayman Islands, where some of his other financial interests were based.
“It’s clear that 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, an employee benefit trust in which staff were paid share bonuses via trusts to avoid tax. The supreme court ruled that tax ought to be paid on these bonuses.
Experts have queried Mr Javid’s use of non-dom status, given that he was born in the UK and therefore would have had to declare that he did not intend to live in the country in the long term.
Jacob Rees-Mogg, Brexit opportunities minister, has listed his share in Somerset Capital Management Limited, an investment firm that has operations in the Cayman Islands, in the register of MPs’ interests.
A spokesperson for Alok Sharma could not be reached for comment.
