Most people think Rishi Sunak had a good day yesterday, so he slipped out details of his tax returns, hoping no one would notice.
I tweeted this:
The days when capital gains are taxed at half (or less) of the rate on income from work should be long gone. This is tax injustice however you look at it.
— Richard Murphy (@RichardJMurphy) March 22, 2023
The Independent featured the comment in their reporting the issue.
I have three further thoughts.
First, we need to see the actual returns. A summary is not good enough. We know nothing about the conflicts of interest Sunak's outside interests might create as a result of having this summary alone.
Second, we are left speculating on Sunak's wealth, but the idea that it is considerable in his own right has to be true.
Third, it is not clear how he paid the tax he owed when he supposedly does not have control of his invested funds. He appears to have insufficient personal funds to do so. Maybe the blind trust that runs his investments is not such a blind trust after all.
This was a half-hearted gesture. No wonder he issued it on a busy news day.
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A good day indeed – for the man who did ‘eat out to help out’ and helped spread Covid.
Sunak has followed the precedent set by Cameron and Osborne in publishing a summary of his tax payments, not the actual tax returns themselves. I don’t know what the problem is with him just publishing the actual returns, as he promised to do last year. The returns would provide only a little more information and could be redacted as appropriate to remove sensitive information (names, addresses, etc).
The media coverage keeps reporting that he has published his tax returns. He has not. It has also focused on how much tax he paid (£432k in the UK last year, plus almost £14k in the US). But more than half of his income is dividends (£172k last year, more in previous years) which are taxed at a lower rate of income tax than earned income (and also do not bear NICs).
And the very large bulk of his taxable receipts (£1.6m) are capital gains taxed at 20%. So his overall tax rate on nearly £2m he received last year is barely more than 20%. This is not a progressive tax system.
Dividends of £179k implies (at a sensible yield) a share portfolio of several millions at least.
And what and where are the assets giving regular capital gains of half a million or more in the last three years? Is this churning of a share portfolio, or a property rental empire, or something else? Who controls his blind trust?
And what if any interests does he have in offshore assets that are not currently delivering taxable income or gains to him? Are there any offshore trusts is he a beneficiary of? Settled by his wife or father in law perhaps? Is he withdrawing clean capital without gains? Who is paying the school fees and other household expenses?
This partial disclosure raises more questions than it answers.
Agreed
Sunak’s entry on the list of ministers interests mentions “1. Financial interests Blind trust / blind management arrangement”-
Incidentally, this list is meant to be published twice a year, in May and November, but has not been updated since May 2022 – https://www.gov.uk/government/publications/list-of-ministers-interests
His tax information letter says : “All of your investment income and capital gains relate to a single US-based investment fund. This is the investment listed as a “blind management arrangement” on the List of Ministers’ Interests. You are subject to tax in the UK on your portion of the income and gains received by this fund, notwithstanding that none of those amounts are distributed to you.”
https://www.gov.uk/government/publications/prime-minister-rishi-sunaks-schedule-of-taxable-sources-of-income-and-gains
Last year he paid tax on £172k of dividends (at 38.1% that would be about £66k of income tax) and £1.6m of gains (about £320k of capital gains tax). If ” none of those amounts are distributed to you” how does he pay the tax? Are there tax distributions so he pays the tax, or does the trust pay on his behalf? What sort of trust is this? Perhaps a bare trust?
HMRC’s Trusts, Settlements and Estates Manual helpfully says:
“An individual puts funds or assets into a trust on terms which allow the trustees to buy and sell trust assets as they see fit without informing the settlor. The purpose of such a trust is to allow a politician not to declare an interest in certain assets because they do not know at any time what assets are owned by the trust. The settlor may retain an interest or the trust may even be a bare trust in which the settlor remains absolutely entitled to the assets. In either case the trustees need give only sufficient details of income and gains to allow the settlor to complete a Self Assessment Tax Return. It is possible there are many bare blind trusts that HMRC would not be aware of because all income and gains are returned by the settlor on their personal Self Assessment Tax Return.”
https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1570
Excellent question
He clearly does get cash from the trust
I can see at least three possibilities – (1) he gets cash from the trust to pay the tax himself; or (2) the trust or the trustee pays the tax due on the income and gains from the trust holdings itself (perhaps the trust and his own tax affairs are dealt with by the same adviser, so it can still be done “blindly”); or (3) he has enough other resources to pay the tax anyway (or a third party does it for him).
His wife?
When Yvette Cooper was asked on this morning’s Radio 4 Today programme whether she would increase Corporation Tax as it was charged at a far lower rate than Income Tax, she refused to answer the question but rabbited on about the non-dom tax (saving maybe only £3 billion) and the increased pension allowance for the top 1% of earners (saving about £1 billion). When asked again specifically about Corporation Tax she refused to say and repeated the same mantra. It is obvious that Labour has no intention of reducing inequality and allowing big business to get off scot-free.
Given your prominence in the media and your many pronouncements on how the tax system should be revised, people may wonder if you have conflicts of interest, if you are doing what you demand others should be doing.
Publishing your own tax returns would make the position clear.
Yet you refuse to do so.
I guess you have something to hide.
Have you noticed I am not prime minister? I am just a professor? And I don’t ask that anyone but very senior politicians publish returns, so you are just trolling.