Chancellor Rishi Sunak’s wife, Akshata Murty, has said she will now pay UK taxes on all her worldwide income after disclosure of her non-domiciled status sparked a furious political row.

In a statement, Ms Murty, who remains an Indian citizen, said she was acting as she did not want her financial arrangements to be a “distraction” for her husband who decides the UK's tax policies.

Her announcement came just hours after Mr Sunak faced further attacks after he disclosed he had held a US green card – making him a “lawful permanent resident” of the United States – while he was Chancellor.In her statement, Ms Murty said her non-dom status – which meant that she did not pay UK taxes on income derived from outside the UK – was “entirely legal”.

However, she said it had become clear that there were many who believed it was not compatible with her husband’s position in charge of the nation’s finances.

“I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family,” she said.

“For this reason, I will no longer be claiming the remittance basis for tax. This means I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises.

“I do this because I want to, not because the rules require me to.”

Earlier today Boris Johnson said that Sunak is doing an “absolutely outstanding job” when questioned about his wife’s tax-reducing non-domiciled status.

He also insisted the man he appointed had done “absolutely everything” required after it was reported he held a US green card for a period while Chancellor.

He told a Downing Street press conference: “As I understand it the Chancellor has done absolutely everything he was required to do.”

The prime minister denied No 10 has been briefing against the chancellor over his wife’s tax status.

“If there are such briefings they are not coming from us in No 10 and heaven knows where they are coming from,” the Prime Minister told a Downing Street news conference.

“I think that Rishi is doing an absolutely outstanding job.”

A spokeswoman for Chancellor Rishi Sunak said: “Rishi Sunak had a green card when he lived and worked in the US.

“Under US law, you are not presumed to be a US resident just by dint of holding a green card. Furthermore, from a US immigration perspective, it is presumed that permanent resident status is automatically abandoned after prolonged absences from the US.

“At the same time, one is required to file US tax returns. Rishi Sunak followed all guidance and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law.

“As required under US law and as advised, he continued to use his green card for travel purposes. Upon his first trip to the US in a Government capacity as Chancellor, he discussed the appropriate course of action with the US authorities. At that point it was considered best to return his green card, which he did immediately.

“All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”

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Labour’s shadow chief secretary to the Treasury Pat McFadden said Sunak's confirmation that he held a US green card while Chancellor “begs further questions”.

“Why did he keep a Green Card for so long while being a UK MP?,” the Labour MP said.

“Was there any tax advantage in doing so? And why did he give this up after holding it for so long?

“Throughout the country households are struggling with the deepest cost of living crisis in decades.

“Their bills are going up, their taxes are going up and they are finding it harder and harder to make ends meet.

“The arrangements revealed this week are not open to them.”

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