Angela Rayner has disclosed she underpaid stamp duty on a seaside flat, claiming she received incorrect legal advice about a complex tax rule.
Ms Rayner’s admission followed mounting pressure and media reports claiming she saved £40,000 on the property in Hove, East Sussex, by removing her name from the deeds of a family home in her Ashton-under-Lyne constituency.
Political opponents have clamoured for Ms Rayner’s resignation over the issue, as the ministerial ethics adviser investigates the matter – probably deciding her political future.
The incident has also highlighted the intricate nature of stamp duty, which applies in “slabs”, with homebuyers paying increasing portions of the property price when purchasing a residential property.
Here, The Independent looks at the issue and the deputy prime minister’s position:
What are the rules around stamp duty?
For those buying their first home, or moving from one to another, stamp duty is usually quite straightforward. There are several rates liable on the purchase, ranging from zero to 12 per cent, based on its value.
When it comes to second homes, the rules can be more complex. The threshold at which the standard rates need to be paid is lowered, and there is also a 5 per cent surcharge which can rise with value.
Between £40,000 and £125,000, the surcharge rate is 5 per cent. This rises to a maximum of 17 per cent on properties worth over £1.5m.
Why did Rayner not pay enough tax on her Hove flat?
Ms Rayner referred herself to the ministerial ethics adviser on Wednesday after admitting, following days of silence, that she had wrongly listed her flat.
When purchasing the £800,000 property in Hove in May, she paid the standard rate of stamp duty, estimated to be £30,000. However, the higher rate for second homes would have made this as much as £70,000.
The deputy PM explained: “When purchasing the property, my understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty.”
She says she did this because she had sold her stake in her constituency home in Greater Manchester into a trust of which her son is the beneficiary.
Ms Rayner explained that she then bought the Hove flat, using the £162,500 lump sum from selling her stake in her Ashton home, “which was the only property I owned and where my savings were”, for the deposit on my new one. She maintains she initially believed, based on legal advice, she was liable for the standard rate of stamp duty.
However, Ms Rayner was later advised that, despite not owning any other property at the time of the purchase, “complex provisions relating to the trust gives rise to additional stamp duty liabilities”.
Where did Rayner get the money for the Hove flat?
The deputy PM says she sold her stake in her family home to her son’s trust in January 2025. This gave her the money to pay the deposit for the Hove flat, which she owns with a mortgage.
The court-instructed trust was set up in 2020 using a payment that was granted after “a deeply personal and distressing incident” involving her son as a premature baby, she says. Now in his late teens, he has life-long disabilities, including blindness.
In a statement, she said: “The trust was established to manage the award on his behalf – a standard practice in circumstances like ours.
“To ensure he continued to have stability in the family home, which had been adapted for his needs, we agreed that our interest in the family home would be transferred to this court-instructed trust of which he is the sole beneficiary.
“Some of the interest in our family home was transferred to the trust in 2023.”
She then sold all of her interest in the Ashton-under-Lyne property to this trust in 2025, although it remains her family home. It is Ms Rayner’s son’s trust that now holds equity in the Ashton house.
What are her family arrangements?
Ms Rayner has two sons with her ex-husband Mark Rayner, and one from an earlier relationship when she was 16.
After divorcing Mr Rayner in 2023, she agreed to a “nesting arrangement” with her former husband that means her son remains in the family home full-time, while they alternatively live there.
The house was only partly put into the trust at this point, with them and law firm Shoosmiths as trustees.
The deputy PM sold her remaining stake of the Ashton house to the trust in January, she says, removing her name from the deeds.
What are the unanswered questions?
Due to complexities in the way stamp duty works, Ms Rayner was due to pay more tax on the purchase of her Hove home even though she is not a trustee of her son’s trust (which owns her family home).
The key question now is whether she had purposefully sought to lower her tax bill, or if she had indeed been given incorrect legal advice.
This is not impossible, tax experts say, as the property law around Ms Rayner’s situation is rarely invoked. This means it may not have occurred to a conveyancer to ask about it, although the question then still remains if Ms Rayner had opted not to tell them about it.
Dan Neidle, founder of Tax Policy Associates, said that in situations where people are buying a house and “everything is simple, you can ask your conveyancer how much stamp duty to pay”. But he said that in complex situations “this is a very bad idea”.
Ms Rayner has maintained that it was not a “tax dodge” and insists it was a mistake.
Another question is how much Sir Keir Starmer knew about the issue, and when, amid a series of conflicting statements from different figures in government. Asked on Monday about the issue, Sir Keir said: “Angela has had people briefing against her and talking her down over and over again. It’s a big mistake, by the way. Angela is an incredible person [and] deputy prime minister.”
On Thursday, a No 10 spokesperson said Sir Keir had been kept informed “as appropriate” about the steps Ms Rayner had taken over her tax affairs.
No 10 has not confirmed exactly when Sir Keir was told that Ms Rayner had underpaid her stamp duty.
What happens next?
All of these questions will probably be answered in the coming days as the ministerial ethics adviser Sir Laurie Magnus investigates the deputy PM. Ms Rayner referred herself to the adviser on Wednesday.
The Conservatives have called on HMRC to launch a full investigation into Ms Rayner, and to hit her with the appropriate fine if she has fallen foul of tax laws.
On Wednesday, she confirmed she is “working with expert lawyers and with HMRC to resolve the matter”.
She could face a fine of up to £12,000 for underpaying stamp duty on her seaside flat in Hove, a tax expert has said.
Speaking to Times Radio, tax expert Mr Neidle said that if HMRC finds that Ms Rayner was “careless” in her tax dealings, she could expect to face a 30 per cent fine of the reported £40,000 she saved.
Could she lose her job?
Cabinet ministers have so far rallied behind Ms Rayner. Rachel Reeves said on Thursday that she has “full confidence” in the deputy prime minister, adding: “She’s a good friend and a colleague, she has accepted the right stamp duty wasn’t paid.
“That was an error, that was a mistake. She is working hard now to rectify that, in contact with HMRC to make sure that the correct tax is paid.”
Sir Keir is likewise reportedly determined to save Ms Rayner, having vowed not to hand his critics a “scalp”.
At PMQs on Wednesday, the prime minister backed Ms Rayner, saying he was “very proud to sit alongside” her.
However, the true test of how tenable the deputy prime minister’s position is will probably be decided by the findings of the ethics adviser.
If these findings are particularly damning, and reveal any evidence of purposeful tax avoidance, it’s unlikely Ms Rayner will be able to withstand the criticism that would follow.
