Angela Rayner faces having to pay tens of thousands of pounds more in stamp duty if tax officials judge she incorrectly paid the lower rate on her Hove flat, tax experts have warned.
The deputy prime minister could be slapped with an additional tax bill if officials judge she paid too little stamp duty when she bought her £800,000 property earlier this year, they said.
Rayner has been under pressure to explain more about her property arrangements for several weeks amid accusations that she might have avoided tax by classifying different properties as her main residence.
For council tax purposes, she has classified her house in Ashton-under-Lyne, Greater Manchester, where she is the MP, as her main residence, thereby avoiding a £2,000 bill on her grace-and-favour apartment in London. But she has since put the constituency home into a trust before declaring the flat in Hove, East Sussex, as her sole dwelling at the time of purchase.
Experts now say that tax officials could demand the higher rate of stamp duty if they decided Rayner was wrong when she declared the Hove flat as her only residence. If they deemed her south-coast property was an additional dwelling, they could demand she pay the higher stamp duty rate of £70,000, rather than the £30,000 she paid when she bought it.
Sean Randall, a tax adviser who specialises in stamp duty, said: “Rayner disposed of the Ashton house into a trust before midnight of the day of completion. But she would be regarded as still owning it if she or her children are a beneficiary under the trust and entitled to occupy the dwelling for life. The key question is whether she or her children are so entitled.”
He added that while Rayner would have declared her Hove flat as her only house, officials at HMRC would have until next spring to challenge that designation. “HMRC has the opportunity, but not the obligation, to check later,” he said. “An inquiry normally starts eight months after completion.”
Henry Pryor, a property agent, said: “The test for stamp duty is not whether you own another property, but whether you have an interest in another property, which is your main one.”
A spokesperson for Rayner did not respond to a request to comment, though her allies insist she has not broken any tax rules and she is not under investigation by the prime minister’s adviser on ministerial standards.
Rayner’s complex property arrangements have attracted criticism from her political opponents, who accuse her of hypocritically minimising her tax liabilities while advocating for higher wealth taxes on others.
Earlier this year, the Telegraph revealed that the deputy prime minister had written a memo to the chancellor, Rachel Reeves, calling for tax rises to help fix the government’s fiscal black hole. They included closing a loophole that allows people to avoid stamp duty by buying property through commercial companies.
Keir Starmer has so far given his deputy his full backing. The prime minister said on Monday: “Angela is an incredible person [and] deputy prime minister.”
Downing Street also revealed on Monday Rayner has been prevented from publicising all of the details about her property ownership by a court order, though would not say what the order referred to. A spokesperson said she was “urgently working” at clarifying the legal position of that order to reveal more about her finances. That information could include the terms of the trust into which she has placed her Ashton home.
