Tax can be a complicated beast.
There is a reason why there are lawyers and accountants who specialise in tax matters: because there are so many ‘ifs’, ‘buts’ and ‘excepts’ that it can be too easy to get it wrong. Even professionals can occasionally get it wrong, which is why firms are required to have indemnity insurance: on those rare occasions something has gone wrong, the client is protected.
That is the crux of deputy prime minister Angela Rayner’s argument in relation to the purchase of her apartment in Hove: that she paid the amount of tax her lawyers told her was due.
In her lengthy statement, she says:
When purchasing the property [in Hove] my understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty … I have subsequently sought further advice from a leading tax counsel to review that position … I have now been advised that although I did not own any other property at the time of the purchase, the application of complex deeming provisions which relate to my son’s trust gives rise to additional stamp duty liabilities.
I acknowledge that due to my reliance on advice from lawyers which did not properly take account of these provisions, I did not pay the appropriate stamp duty at the time of the purchase. I am working with expert lawyers and with HMRC to resolve the matter and pay what is due.
What does Angela Rayner say?
The deputy prime minister’s statement is, as stated, lengthy, and deeply personal. It explains the circumstances surrounding her divorce and the sale of her former matrimonial home in Ashton-under-Lyne. I am not going to reproduce it in full here, but it is worth a read if you want to understand her defence to the present right wing onslaught.
The salient points, however, are as follows:
In 2020, a trust was set up by the high court for the benefit of her son, relating to an award following his premature birth and resulting lifelong disabilities.
In 2023, some of the interest in the family home was transferred into the trust as part of her divorce arrangements, to ensure her son could remain living in a home which had been specially adapted to meet his needs.
In January 2025, Rayner sold the remainder of her share of the property (amounting to 25%) to the trust.
Rayner used the sale proceeds to put a deposit on the apartment in Hove.
Rayner continues to live in the family home and treats it as her main residence.
There is much to unpack here and without sight of the trust deed or the corresponding advice from the purchase it is impossible to corroborate Rayner’s account. However, she has referred herself to the independent adviser on ministerial standards, Sir Laurie Magnus, to investigate whether she has breached the ministerial code. She has also promised to give Sir Laurie all of the information he needs and to cooperate with his investigation.
What follows instead here is a brief political analysis of Rayner’s circumstances, and the inevitable question: should she resign?
What is stamp duty?
Stamp duty land tax (which I will refer to simply as ‘stamp duty’ for ease) is charged on purchases of residential property.
There are three main stamp duty rates: the standard rate, the discounted rate for first-time buyers and the higher rate for purchases of additional properties. The discounted rate is not relevant in this case; the question at the time was whether Rayner should have paid the standard rate or the higher rate.
The rates (which are available in full at the above link) are calculated against the purchase price, with the higher rate being charged at 5% on top of the standard rate.
What was Angela Rayner’s stamp duty liability?
According to the deputy prime minister, at the time she purchased the Hove apartment, she was advised that, as she did not own another property, she was entitled to pay the standard rate of stamp duty. Based on a purchase price of £800,000, the stamp duty would have been £30,000.
That would be the obvious interpretation of the stamp duty rules based on Rayner’s circumstances. But remember: tax can be a complicated beast. Whether the higher rate applied to her purchase hinged on whether she owned an interest in another property.
While Rayner had sold her share of the family home, it was not a simple sale to an independent third party. She sold it to a trust. This is where the waters muddy.
There are various laws in place to ensure trusts cannot be used to evade tax and while I am absolutely not suggesting that was what the deputy prime minister was attempting to do (remember: the trust was set up by the high court to provide for her son), those laws apply regardless of the trust’s intention.
I am not going to rehearse those laws here, but, in short, if someone has a beneficial interest in another property under a trust, the higher rate will apply, even if they do not have a legal interest in that property.
If Angela Rayner sold her interest in the family home, why would she still have a beneficial interest?
This is a question that can only be answered with certainty by looking at the trust documents. A beneficial interest can arise for a number of reasons, for example if someone is given a right to live in the property in the trust for the rest of their life, or, if the beneficiary is under 18, then the beneficial interest is deemed to be held by their parents.
Without sight of the trust documents, the exact nature of Rayner’s beneficial interest in the family home is pure speculation. However, on receiving further advice, Rayner was informed she should have paid the higher rate of stamp duty, implying the existence of a beneficial interest.
On a purchase price of £800,000, the higher rate stamp duty would have been £70,000, which is what has led to the accusation from the right wing media that she has deliberately sought to avoid £40,000 in tax.
Has Angela Rayner done anything wrong?
Ultimately, that is a question for Sir Laurie Magnus.
The deputy prime minister has stated she has paid the wrong amount of stamp duty and will be liable to pay the difference plus any penalties and interest. That is likely to add a considerable amount to the tax bill. She has said she has self-reported to HMRC and they will calculate the additional amount, including interest and penalties, which she will be required to pay.
Rayner has claimed she received incorrect legal advice when she purchased the Hove apartment. That is likely to be rigorously defended by the firm giving that advice. As set out above, it is entirely possible she was mis-advised. However, in general, the quality of legal advice is only as good as the information which led to it.
What should be ascertained is where Rayner obtained that advice, what questions she was asked and what information she disclosed. Only then can it be established if she had been asked the right questions, given sufficient information for the correct advice to be given, or if she was genuinely mis-advised. That, one assumes, is what Sir Laurie will seek to establish.
These are complicated and technical areas of property, trust and tax law which require expert understanding and advice. I would no more expect a government minister who was not involved in drafting the law to get it right without that advice than I would any other member of the public without the expert legal knowledge and experience.
Should Angela Rayner resign?
The deputy prime minister has said she considered resigning, before evidently deciding against it, and she has the prime minister’s support.
The Tories, predictably, are jumping up and down calling on her to resign. The BBC’s chief political correspondent Henry Zeffman suggests that regardless of the investigation, the court of public opinion may prove more decisive in determining her future.
For his part, the Liberal Democrat leader Sir Ed Davey has been surprisingly more defensive, but then he understands better than most Rayner’s family situation. ‘I know the thing my wife and I worry most about is our son’s care after we have gone,’ he said. ‘I completely understand and trust that the deputy prime minister was thinking about the same thing here.’ However, he does say that ‘if the ethics adviser says Angela Rayner has broken the rules, her position may well become untenable.’
Angela Rayner is a key part of Sir Keir Starmer’s government. Not only is she front and centre of the government as deputy prime minister, but as secretary of state for housing, communities and local government she has been charged with steering the planning and infrastructure bill and the renters’ rights bill through parliament. Yesterday, she was in parliament to move the second reading of the English devolution and community empowerment bill. All three bills are essential components of the Labour party’s programme for government.
This is not the first time the Tories and the right wing media have sought to smear the deputy prime minister. In early 2024, before Labour won the general election, the party accused her of misleading HMRC during the 2015 sale of her council house. After investigation, she was cleared by both the police and HMRC. A Savanta poll at the time said that 40% of the public, including 56% of Labour members and even 26% of Tory members, said the story sounded like a smear.
Whilst there are clear factual differences, this story feels much the same. The pile-on against a working class woman from the Tories and right wing media stinks of a smear campaign, and regardless of the outcome of Sir Laurie’s investigation, feels like little more than a distraction from the Tories’ lack of fresh ideas and losing ground to Reform.
At this stage, which I would caveat by saying is before the standards investigation has even begun, there is no evidence that the deputy prime minister has done anything wrong. Indeed, given her position in government, the recurring speculation that she may one day succeed Starmer as leader of the Labour party and the previous smear campaign, it is hard to see why she would risk her current and potential future career by being dishonest.
If she has acted in good faith on legal advice which was given on full possession of the facts surrounding her circumstances, or indeed if the advisers failed to conduct the proper due diligence when formulating their advice, then I do not see any reason why Rayner should bow to the pressure from the right wing and resign.
Disclaimer: This article is written as political commentary and is not intended (nor should it be considered) to be legal advice. You should always seek legal advice based on your own circumstances when buying a property, or when entering into or dealing with a trust.