Rishi Sunak’s wife has non-domicile status, allowing her to avoid paying UK taxes on her overseas earnings.

In a major embarrassment for the chancellor, a spokesperson for Akshata Murty confirmed the arrangement, saying it was a result of her Indian citizenship.

“India does not allow its citizens to hold the citizenship of another country simultaneously,” the spokesperson said.

“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.”

She has a stake in her billionaire father’s IT services company Infosys, from which she receives a multi-million pound annual dividend.

Labour called on Sunak to reveal how much UK tax Murty’s non-dom status has allowed her to avoid, amid reports that it could run into the millions of pounds.

Tulip Siddiq, shadow economic secretary to the Treasury, said: “The chancellor has imposed tax hike after tax hike on the British people. It is staggering that – at the same time – his family may have been benefitting from tax reduction schemes.

“This is yet another example of the Tories thinking it is one rule for them, another for everyone else.

“Rishi Sunak must now urgently explain how much he and his family have saved on their own tax bill at the same time he was putting taxes up for millions of working families and choosing to leave them £2,620 a year worse off.”

It is understood Sunak declared his wife’s tax status to the Cabinet Office when he first became a minister in 2018.

It is not the first time that Murty’s financial arrangements have been called into question in recent days.

Last week, Keir Starmer urged the chancellor to “come clean” about any links his wife’s family business has with Vladimir Putin.

The Labour leader said it would be wrong for the chancellor’s household to be “benefiting” from any money coming from Russia while the government is imposing sanctions on its regime.

Sunak, who has urged companies to pull out of the country in order to squeeze the Russian economy, has said his wife should not be subjected to political attacks.

The chancellor’s personal popularity has taken a nosedive in recent weeks as the cost of living crisis bites.

Although he cut fuel duty by 5p and raised the threshold at which workers start paying national insurance, he has been accused of failing to do enough to tackle soaring energy bills.

Meanwhile, millions of workers and their employers are braced for a 1.25 percentage point hike in the national insurance bills.