Angela Rayner has given a lengthy explanation as to why she underpaid stamp duty on the purchase of her second home, but there are still unanswered questions.
The deputy prime minister has claimed she made an honest mistake as lawyers initially advised her she only owed the basic rate of stamp duty when she bought a flat in Hove in May.
Image: Deputy Prime Minister Angela Rayner. Pic: PA
She said it was a “complex” situation, as she had sold her stake in her family home in Ashton-under-Lyne, Greater Manchester, to a trust that was set up to provide for her teenage son, who has lifelong disabilities.
This meant she did not technically own the home in Greater Manchester when she purchased the one in East Sussex – but subsequent legal advice said the second home surcharge still applied.
What did Rayner tell her lawyers?
While Ms Rayner has made all these details public, “the crucial question is what she told her conveyancer when she purchased the Hove flat and what advice they gave her based on what she told them”, Patrick Cannon, a tax barrister at Cannon Chambers told Sky News.
More from Politics
“They may have given her wrong advice but she may not have given the full story.”
As set out on the government’s website, if a trust is set up for a child under 18 – as Ms Rayner’s son is – the parent is treated as still owning that dwelling for the purposes of stamp duty. There is an exception if a trustee buys a house for a child under the Mental Capacity Act, but that does not appear to be the case here given the higher tax is owed.
Mr Cannon said that to a tax adviser this is a “readily understandable area of the law” but there are “many solicitors and property lawyers who would not have picked up on this provision”.
Often conveyancers will tell their client not to rely on their tax advice but that might depend upon what they know in the first place – and in this case the trust.
As Thomas Wallace, director of the WTT tax group, said: “For correct advice to be given around any potential liability the full facts must be disclosed to the adviser, and this is particularly important where a person’s affairs are complex such as having an involvement with trusts.”
Please use Chrome browser for a more accessible video player
20:00
Angela Rayner’s tax affairs statement in full
Who did Ms Rayner get her advice from?
The cabinet minister has not named who she initially consulted and they can’t speak out because of client confidentiality.
Sky News understands she initially consulted three people before buying the Hove flat – one individual experienced in conveyancing and two experts on the law around trusts.
However, it is not clear if they were experts in tax law.
In a thread on X, tax expert Dan Neidle wrote that if Ms Rayner did not consult the right lawyers then it could be considered carelessness on her part.
X
This content is provided by X, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable X cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to X cookies.
To view this content you can use the button below to allow X cookies for this session only.
But he said it could also be the fault of the lawyers for advising outside their expertise, if they are not a stamp duty specialist.
When will the ethics investigation conclude?
Whether Ms Rayner’s story stands up to scrutiny will ultimately be decided by the prime minister’s independent ethics adviser Sir Laurie Magnus, who is investigating whether a breach of standards took place.
It is not clear how long the probe will last, or what will happen if she has found to have broken the rules.
Sir Keir Starmer has been quick to fire ministers caught up in wrongdoing but it would be a huge blow to his operation to lose someone so senior. Ms Rayner, who is also the housing secretary, is incredibly popular with the Labour membership and was elected by them to be deputy leader of the party.
This means that while she could be sacked as housing secretary and deputy prime minister she would remain deputy party leader unless she chose to step down – triggering a deputy leadership election.
That would be very damaging to Labour after only one year in office and would also question Sir Keir’s judgement – as he has spent days defending Ms Rayner on the airwaves.
What did the PM know and when?
There are questions over what Downing Street knew and when as up until Monday they were insisting the deputy PM had done nothing wrong. Sir Keir even went on the radio to call Ms Rayner a “great British success story” and condemn “briefings against her” as a “mistake”.
In her statement on Wednesday, Ms Rayner did not say when she realised she had paid the incorrect amount of tax, only that she sought expert counsel opinion following media scrutiny and then applied to have a court order lifted which prevented her from speaking about the trust.
Chancellor Rachel Reeves said on Thursday morning that the “definitive advice” on Ms Rayner’s stamp duty arrangements came in on Wednesday morning, but earlier Education Secretary Bridget Phillipson said follow-up advice “came back on Monday”.
Please use Chrome browser for a more accessible video player
2:33
Reeves: I have full confidence in Angela Rayner
Will Rayner be fined?
Even if Ms Rayner survives the ethics investigation, she may not be fully out of the woods. As independent stamp duty expert Sean Randall points out, she could still face a penalty from HMRC. This could be as much as 100% of the tax she owes – reportedly £40,000 – though this is usually negotiated down to 30-40%, according to Mr Randall.
A penalty from HMRC means carelessness rather than dishonesty, but Ms Rayner might find this hard to survive, given she lambasted her Tory opponents for similar mistakes (such as the case with former Tory chairman Nadhim Zahawi).
Mr Randall said that relying on tax advice “is not enough to avoid a penalty” and the deputy prime minister will have to show that she took reasonable steps to get the correct advice and provided all the relevant information to her lawyers.
Do our tax laws need to be changed?
If Ms Rayner is cleared of any rule breaches, it could spark a debate about our tax laws. If they are so complicated that the second most senior person in government can’t understand them, and lawyers get them wrong, does stamp duty need to be changed?
For Mr Cannon and Mr Randall, it was a resounding “yes”. But Mr Randall added: “That question has been around for as long as I have. The stamp duty code is crazy complicated.”
Backpack EU, owner of the former FTX EU, launches a regulated perpetual futures platform in Europe after settling with the Cyprus regulator and securing a MiFID II license.
The new home secretary will host talks on how to stop people smuggling in her first major engagement in the role.
Shabana Mahmood will host the so-called Five Eyes security alliance, holding talks between counterparts from the US, Australia, Canada and New Zealand.
The security alliance discussion comes after an estimated 1,000 people arrived by small boat in Britain over the course of a single day, with French authorities saying 24 people were rescued while trying to cross the English Channel.
Ms Mahmood said the numbers, which take the yearly total to more than 30,000 in record time, were “utterly unacceptable” and that she expected migrant returns under a deal agreed last month with France to begin “imminently”.
Sir Keir will now be hoping to draw a line under the fallout of his former deputy’s departure, as well as a summer dominated by criticism of his government’s handling of the small boats crisis.
Ms Mahmood said the Five Eyes intelligence sharing pact would “agree new measures to protect our border”. The group will also discuss new measures to tackle child sexual abuse online, as well as the spread of deadly synthetic opioids, the Home Office said.
Ms Mahmood said: “Rebuilding our reputation on the world stage is how we tackle serious organised crime and secure our borders.”
“The Five Eyes might be drawn from different corners of the globe, but we are united by our alliance,” she added.
“As the security threats we all face become more complex and span continents, we are stronger and safer together.”
She will be joined at the talks by US secretary of homeland security Kristi Noem, Canadian public safety minister Gary Anandasangaree, Australian home affairs minister Tony Burke and New Zealand minister Judith Collins.
Please use Chrome browser for a more accessible video player
2:08
What PM’s reshuffle reveals about his priorities
The Prime Minister has told his new ministers to “go up a gear” in delivering on Labour’s agenda, part of which now involves a toughened immigration policy as he faces pressure in the polls from Nigel Farage’s Reform UK.
In Ms Mahmood’s first full day in the job, she met the head of Scotland Yard to receive a briefing on the policing operation in response to protests in London.
“Supporting Palestine and supporting a proscribed terrorist group are not the same thing,” she said.
“An honour to visit Sir Mark (Rowley) and the Metropolitan Police to see them at work policing protests yesterday.”
Almost 900 people were arrested in central London at a protest against the banning of Palestine Action.
The leader of Britain’s trade unions is to accuse Sir Keir Starmer of failing to deliver the change Labour promised during the election campaign last year.
In his keynote speech at the TUC conference in Brighton, general secretary Paul Nowak will claim that for too many people change still feels like a slogan, not a reality.
After a troubled first year in government that has seen Labour lose support to Reform UK, Mr Nowak will warn the lack of change cannot continue and the government must deliver on jobs, public services and living standards.
And he will claim Rachel Reeves’ budget on 26 November must include windfall taxes on bank profits and gambling companies, a wealth tax on millionaires and the lifting of the two-child benefit cap introduced by George Osborne during the coalition government.
Mr Nowak’s speech comes just days after the unionslost their champion in cabinet, Angela Rayner, prompting fears among delegates in Brighton that the government is poised to weaken its flagship legislation on workers’ rights.
Image: Paul Nowak. File pic: PA
The Conservatives have responded to Ms Rayner’s demise by writing to the new business and trade secretary, Peter Kyle, calling on him to scrap the Employment Rights Bill, claiming it will reduce jobs and mean more red tape and bureaucracy.
But Labour is losing support to Nigel Farage’s party, not the Tories, and will also – potentially – to left-wing parties in future. And in an unusual move, the new left-wing leader of the Green Party, Zack Polanski, will also address the TUC later.
Labour’s election manifesto last year showed a black and white photo of a shirt-sleeved Sir Keir on the front cover with the single word “Change” in red.
In his attack on the government’s first year in office, Mr Nowak will say: “The Tories took Britain to the brink. That’s why last July, the government was elected on a manifesto that promised change.
“But we have to be honest – for too many people, change still feels like a slogan not a lived reality.
“This can’t continue. Throughout our history, we’ve been at our best when we’ve been ambitious for working people.
“So today, my message to the government is simply this.
“Deliver the manifesto on which you won a huge majority last July. Deliver good jobs, decent public services and better living standards in every corner of the country. Deliver the change people voted for.
“And show working-class communities whose side you are on.”
Please use Chrome browser for a more accessible video player
1:19
Could Rayner come back?
On the budget, which Labour MPs believe will be crucial to the government’s hopes of recovery in its fortunes, Mr Nowak will declare: “Introduce a windfall tax on record bank profits and gambling companies. And back it with new taxes on wealth.
“If billionaires can afford fleets of private yachts. Day trips into space. Weddings that shut down Venice – they can pay a bit more tax.
“Do what’s best for those who go out to work, day in, day out, and still can’t get by. Deliver the Employment Rights Bill and deliver it in full.
“And make it clear – a Labour government will never stand aside and watch a child’s potential be wasted because of poverty. Lift the two-child cap, and give our kids the future they deserve.”
Please use Chrome browser for a more accessible video player
1:00
TUC to govt: ‘Deliver on workers’ rights’
And on the issue set to dominate this week’s conference, workers’ rights, Mr Nowak will say: “The government has a manifesto promise to make work pay.
“Stronger rights at work are overwhelmingly popular with voters across the political spectrum.
“The public knows decent work is the best way to deliver the reset this country needs.
“The best way to improve living standards.
“And the best way to rebuild our communities hit hard by low pay and insecure work.
“So here is our challenge to government.
“Deliver that Employment Rights Bill in full and deliver the change you promised at the election.”
But the Tories’ shadow business secretary Andrew Griffith, in a letter to Mr Kyle, claims the bill will be deeply damaging to economic growth and reduce living standards.
“Rather than proceed at this time with a measure which on the government’s own impact assessment will reduce employment and growth, now is the time to put the national interest first,” he wrote.
“Any credible ‘reset’ of this government requires that this bill be shelved and the government look afresh at measures to promote the growth and competitiveness of the UK economy.”