With a 0.91% stake in her father’s tech firm Infosys, it’s believed her net worth is around £500m. Why would someone with so much money avoid paying tax — even if their strategy is perfectly legal? Let’s investigate…
Keeping up with the Joneses
Could it be that Murty’s simply keeping up with the Joneses? For the average person, competing with the neighbours might involve installing a Ring doorbell or getting a nicer car.
To Murty, competing over Range Rovers is probably like two children arguing over who has the bigger bag of 1p sweets from the corner shop.
And as the daughter of a billionaire, Murty’s likely surrounded by wealthy friends with even bigger bags than her.
Many people measure their own success based on how well they’re doing compared to those around them.
I’m often asked: “How are we doing compared to your other clients?”
I understand the curiosity, but there’s little point in knowing how well my other clients are doing because they won’t have the same goals, aspirations and expenses as you. But comparing ourselves to others is what we humans do naturally.
In 1995, Harvard researchers carried out a survey called ‘Is more always better?’ The survey asked participants to choose between two options:
The researchers specified that prices of goods and services would remain the same in both cases, so a three-figure salary could lead to a nicer home, a fancier car, and a more comfortable or extravagant lifestyle than a more modest salary would.
You’d think that most people would pick option 2, wouldn’t you? Why would you choose a $50,000 salary when you could have twice as much?
But as it turns out, around half of the study’s respondents didn’t want more money. They just wanted more than everyone else - even if it meant a more modest lifestyle than the alternative.
How much is enough?
Another question I’m often asked is: ‘How much is enough?’ The answer is of course subjective. It depends on what the money is being used for.
Nine times out of ten, the people who ask me this question do have enough already.
Okay, they might not have enough to buy Twitter, but they have enough to live rich and fulfilling lives now and well into retirement.
They might have put their kids through private school, helped their grandchildren on the property ladder, and retired comfortably at a reasonable age.
Unfortunately, it can be a challenge to make them realise this themselves… because there’s always more.
People don’t magically become content when they make more money. Just look at Elon Musk. $264bn and it’s still not enough.
Does your spending align with your values?
So, what’s the solution? Well, to start with, I think we need to be honest with ourselves about what our values are.
For example, many people say they want to retire early, but when I dig a little deeper, they often enjoy their career and get great fulfilment from it.
Achieving early retirement can require a lot of sacrifice in the present, so it’s worth thinking carefully about whether the trade-off is worth it.
On the other hand, some people might be better off enjoying their wealth now - going on cruises and or going out for two meals a week instead of one - rather than sacrificing their enjoyment now by pouring as much money as possible into pensions and investments so they can have these things in future.
And then we have those who insist on four holidays a year. Where has this number come from? What’s the reason? Do they even know where they want to go?
Picking random destinations on a whim might seem like something a wealthy person would do, but there might be other things they could spend their money on that brings them just as much happiness.
How does spending make us feel?
Next, it’s time to identify how spending actually makes us feel.
Take the man who has a mid-life crisis and buys a sports car, for example. That car won’t necessarily make him happy. In fact, when he realises the pot of gold at the end of the rainbow doesn’t solve all his problems, he may be left feeling even worse.
That’s why I recommend keeping track of how you feel after spending money.
Next time you use your credit card or make a large purchase, ask yourself these questions:
I’m not encouraging you to beat yourself up for bad behaviour. Instead, I’m simply urging you to acknowledge how you feel.
You might even keep a little notebook called ‘Money Experiments’.
Spend money, notice how you feel, write it down.
Eventually, you’ll stop worrying about what other people are doing and how you measure up. You’ll be too busy thinking about what your money is doing for you.
Non-dom explained
Last month Rishi Sunak’s wife Akshata Murty came under scrutiny after it emerged that she hasn’t been paying UK tax on her international income, thanks to the tax advantages of her ‘non-dom’ status – something we touch on in this month’s post.
But what does ‘non-dom’ mean?A non-UK domiciled person (also known as a non-dom) is someone who does not have the intention to reside permanently or indefinitely in the UK.Non-doms do not have to pay tax on international income and gains, provided they don’t ‘remit’ it in the UK.
This essentially means that as long as the money is kept offshore, it doesn’t need to be disclosed to HMRC.For individuals who often move from country to country, this can simplify their tax affairs and reduce their taxes.Please note: The Financial Conduct Authority does not regulate some aspects of trust, tax and estate planning
