Sajid Javid used a tax loophole to take advantage of benefits away from home while working at the Treasury as an assistant minister, The Independent understands.
The Conservative leadership candidate, who on Monday called for greater scrutiny of candidates as he launched his campaign, would only say he gave up the controversial tax status “before entering public life” and refused to answer further questions questions about your tax affairs.
But according to sources familiar with Mr Javid’s tax planning, while the former health secretary gave up non-domiciled status in 2009, he retained some of the tax benefits through an offshore trust until 2012. The move, which is perfectly legal , allowed him not to pay UK income tax on some foreign investment income. Since 2011, Javid has worked at the Treasury as a ministerial assistant to the then chancellor George Osborne.
Although Members of Parliament are not allowed to use non-dom on a so-called personal basis, for income tax or inheritance tax purposes, they can still benefit from it through trusts. That’s because trusts are legal entities in their own right, like companies, according to tax experts.
Dan Needle, founder of Tax Policy Associates Ltd, told The Independent: “The non-domestic status runs out after 15 years. It is standard planning for non-homesteaders approaching this limit to place their foreign property in an “excluded property trust”. This effectively preserves the advantage of non-domestic status forever.”
“In my view, this is tax avoidance – Parliament intended this statute to end, and this is a loophole that avoids that outcome,” he added.
Mr Javid refused to say where his trust was based, but said it was not dissolved until 2012, when he had already started his political career and served as the PPS – the eyes and ears of the then chancellor.
He told reporters on Monday when asked where he was historically located for tax purposes: “I’m not going to go into more detail about my tax affairs, which are related to the time I was not in public life. I have not had a permanent residence throughout my time in public life.” Separately contacted by The Independent, Mr Javid’s spokesman declined to comment on his use of out-of-home privileges while an MP.
The tax status of the leadership candidates has come under the spotlight after The Independent revealed that HMRC experts are investigating Chancellor Nadhim Zahawi’s financial affairs. Earlier this year, his predecessor, Rishi Sunak, who is now the top leader, faced questions when it came to light that his wife, Akshatha Murthy, had been using non-domestic status.
Asked about releasing his tax returns on Sunday morning, Mr Javid said: “I have no problem with that kind of transparency. I think if I get down to the bottom two, the bottom two candidates should be pretty open about their tax affairs.”
Meanwhile, Mr Zahawi has vowed to “answer any questions that HMRC have for me” and publish his returns every year if he succeeds Boris Johnson in No 10. Mr Sunak has yet to comment on the release of his tax details .
To be the so-called non-domiciled on a remittance basis allows individuals to pay tax in the UK only on their UK-sourced income, rather than, like ordinary citizens, their entire worldwide income.
Mr Javid said on Sunday he used non-domestic status on his tax returns for about “four or five years” in the 2000s.
The then cabinet minister said in a statement on tax affairs in April this year that he dissolved the trust when he became a government minister in 2012 and imposed 50 per cent income tax “on those assets” – “the heaviest possible tax burden’. That would wipe out any accumulated tax breaks, he said.
He has also repeatedly said that he has always declared the information required by tax, government and parliamentary authorities.
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