Angela Rayner admits underpaying tax on flat as PM backs her

Angela Rayner has admitted she underpaid stamp duty when buying her £800,000 flat in Hove, as the prime minister gave her his backing.

The deputy prime minister and housing secretary said arrangements on her family home in Greater Manchester meant she should have paid a higher rate.

She denied she had tried to dodge the extra tax, blaming the “mistake” on initial legal advice that failed to “properly take account” of the situation.

Sir Keir Starmer stood by his deputy at Prime Minister’s Questions, saying he was “very proud to sit alongside” her.

But Conservative leader Kemi Badenoch called on him to sack her, calling her position “untenable”.

Rayner says she has now contacted HMRC to work out the tax she needs to pay, and referred herself for investigation by the PM’s standards adviser.

She has been under mounting pressure in recent weeks after reports she had saved £40,000 in stamp duty on the East Sussex flat by not paying the higher rate reserved for additional home purchases.

Her admission of an extra tax liability is damaging for the deputy prime minister, who was prominent in attacking the conduct of Tory ministers before Labour took office last year.

It also presents a political headache for Sir Keir, with Rayner – also Labour’s deputy leader – providing a key link to the left of the party and the unions upon which it depends for support.

The Conservatives have also sought to highlight that Labour raised the higher stamp duty rate from an extra 3% to 5% at last year’s Budget.

In a statement, Rayner confirmed she had paid the standard rate of stamp duty when buying the flat in May, after receiving legal advice.

She added that she had part-funded the purchase by selling her remaining stake in her family home in Ashton-under-Lyne, Greater Manchester, which she shares with her ex-husband and family.

Some of her interest in the home had already been sold following her divorce to a court-instructed trust previously set up to help fund the care for her son, who has lifelong disabilities, she said.

The arrangement had been designed to give him “security of knowing the home is his, allowing him to continue to live in the home he feels safe in,” she added, and was “a standard practice in circumstances like ours”.

But fresh legal advice revealed “complex deeming provisions” in the trust meant she should have paid the higher stamp duty rate on the purchase of the Hove flat, she said.

“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,” she added.

“I deeply regret the error that has been made. I am committed to resolving this matter fully and providing the transparency that public service demands.”

Downing Street has yet to set out the terms of reference for the inquiry that will now take place by Sir Laurie Magnus, the PM’s adviser on ministerial interests.

At Prime Minister’s Questions, Sir Keir told MPs that Rayner had “explained her personal circumstances in detail”.

“I know from speaking at length to the deputy prime minister just how difficult that decision was for her.

“She has now referred herself to the independent adviser. That is the right thing to do,” he added.

But speaking to reporters, Kemi Badenoch said: “If the prime minister had a backbone, then he should have sacked her already.

“If you are the deputy prime minister helping to set tax policy, if you are the housing secretary deciding where people are going to live [and] how much that’s going to cost, then you need to get your own affairs in order,” she said.

“Of course we understand that people have different circumstances, and difficult personal circumstances. But that doesn’t mean that you should not follow the law.”

Liberal Democrat leader Sir Ed Davey said Rayner’s position “may well become untenable” if the investigation concludes she has broken ministerial rules.

But he added: “As a parent of a disabled child, I know the thing my wife and I worry most about is our son’s care after we have gone.

“So I can completely understand and trust that the deputy prime minister was thinking about the same thing here.”

The existence of the trust had not previously been known, and Rayner said she had been prevented from sharing more details due to a court order that was lifted on Tuesday after she successfully applied to have it waived.

Asked whether she had thought about resigning instead of disclosing details about her son, she told Sky News: “I spoke to my family about it.”

“I spoke to my ex-husband, who has been an incredibly supportive person because he knows that all I’ve done is try and support my family and help them.

“The number one priority for me and my ex-husband has always been to support our children and do the best thing for our children.”

Rayner has not said at what point she took the further additional legal advice that revealed her additional tax liability.

As recently as Friday, the deputy prime minister had insisted she had paid the “relevant duty” on the Hove property.

Sir Keir publicly backed his deputy on Monday, adding she had “had people briefing against her and talking her down over and over again”.

No 10 has not said when the PM was informed about Rayner’s underpayment or whether he had seen the legal advice.

The Tories have also questioned whether Rayner’s grace-and-favour flat in Admiralty House in central London should be her main home for council tax purposes, instead of her Ashton-under-Lyne home.

The Cabinet Office has previously said it was a “longstanding principle” that the government covers council tax on official residences where they are used by ministers as a second home.

In her statement, Rayner said the house in Ashton-under-Lyne remained her “family home”, where she is registered for most official and financial purposes, including credit cards, and kept the “majority of my possessions”.