Several media reports suggest that the deputy Prime Minister, who is also the Secretary of State for Housing, Communities and Local Government, is in discussions with HMRC to rectify the underpayment and has referred herself to the Prime Minister’s ethics adviser following the confirmation that she will have to pay more stamp duty.
The issue centres on whether Rayner should have paid the standard rate of stamp duty on the Hove flat, which she bought in May, or the higher rate for second homes. The difference in costs could be as much as £40,000, reports suggest.
Rayner has said that her main home is in Ashton-under-Lyne, which is where her children live, and where she resides when she is in the constituency.
However, Rayner put the stake in her constituency home in a trust in January, with her children as the main beneficiaries, and removed her name from the deed of the house.
She was consequently advised that she was not classed as the owner of the property so could classify the Hove flat as her main home. This would mean she would pay the standard rate of stamp duty as opposed to the higher rate.
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This has created complexity, as tax experts have now said the flat cannot be treated as her only residency due to the provisions of the trust.
In a statement, Rayner said: “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 [that] 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.”
She added: “The arrangements I have set out reflect the reality that family life is rarely straightforward, particularly when dealing with disability, divorce and the complexities of ensuring your children’s long-term security. Every decision I have made has been guided by what I believe to be in my children’s best interests.
“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. It is for that reason I have today referred myself to the independent adviser on ministerial standards, and will provide him with my fullest cooperation and access to all the information he requires.”
Recent reports have suggested that Chancellor Rachel Reeves is considering replacing stamp duty with a property tax. Industry figures said that while stamp duty is a “regressive tax”, an alternative would have to be well thought-out.
