Deputy PM Rayner quits over stamp duty underpayment

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Ms Rayner, who was also housing secretary, admitted that she underpaid stamp duty on the £800,000 flat she bought in Hove earlier this year (Peter Byrne/PA) Peter Byrne

Deputy Prime Minister Angela Rayner resigned from Government after admitting she underpaid stamp duty on an £800,000 flat in Hove. The Labour politician, who also served as Housing Secretary, said she "did not meet the highest standards" in relation to the property deal.

Rayner stressed it was never her intention "to do anything other than pay the right amount" when she bought the seaside property earlier this year. She had faced mounting pressure after media reports claimed she saved £40,000 in stamp duty by removing her name from deeds of a family property in her Ashton-under-Lyne constituency.

Complex trust arrangements

The underpayment stemmed from complex provisions relating to a trust established for Rayner's son, who has life-long disabilities. Rayner had believed, on legal advice, that she was liable for the standard rate of stamp duty when purchasing the Hove flat in May.

However, she was later advised that although she did not own any other property at the time, "complex deeming provisions which relate to my son's trust gives rise to additional stamp duty liabilities". She is now working with lawyers and HM Revenue and Customs to resolve the matter.

Expert criticism of stamp duty system

Tax experts have seized on the case to highlight the confusing nature of stamp duty rules. Dan Neidle, founder of Tax Policy Associates, called stamp duty a "confusing mess" and questioned why the tax exists at all.

Property presenter Kirstie Allsopp described the second home surcharge as "a vicious little tax which catches people at some of the most difficult stages of their life". She added: "If Angela Rayner didn't understand how it worked then how are the rest of us supposed to?"

How stamp duty works

Stamp duty applies in England and Northern Ireland, with Scotland and Wales operating separate property taxes. The tax applies in "slabs", with buyers paying increasing portions of the property price on residential purchases.

The current nil rate band for home-movers purchasing a property as their only home is £125,000, recently reduced from £250,000 in April. Buyers usually pay an extra five per cent on stamp duty rates if purchasing a new property means they will own more than one.

Professional advice essential

Housing market experts emphasised the importance of taking specialist advice when calculating stamp duty obligations. David Hollingworth from L&C Mortgages said: "The more complex the situation the more specialist that advice will likely need to be."

Nathan Emerson from Propertymark noted that understanding tax obligations "will likely be unfamiliar to many people" given how infrequently most people buy property. Colleen Babcock from Rightmove called stamp duty "a confusing and outdated tax" requiring reform.

Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.

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