Angela Rayner stamp duty explained: What did she do, why has Deputy Prime Minister resigned?

She also resigns as deputy leader of the Labour Party, meaning there will be a party election to replace her. Rayner, who is the MP for Ashton-under-Lyne, referred herself to the PM's ethics adviser earlier this week, after admitting underpaying stamp duty on her £800,000 flat

In her resignation letter, she says she takes "full responsibility" for the "error" of not seeking further tax advice on the purchase. The ethics report finds Rayner breached the ministerial code and "did not heed the caution" in legal advice she received

What did Angela Rayner do wrong?

When you buy a property worth more than £125,000, you have to pay stamp duty. The size of the tax bill depends on how much the property is worth and whether it is an “additional property”.

If you’re buying a second, third or fourth home, you’ll pay a lot more than if you’re selling your only home and buying another. It’s this point that has tripped up the deputy prime minister.

She bought the East Sussex apartment earlier this year for £800,000 and paid £30,000 in stamp duty. That’s how much you’d pay if it was your sole property.

In a statement yesterday, Ms Rayner said that when she bought the flat, her “understanding, on advice from lawyers,” was that this was the right amount. But, she says, after taking “further advice from a leading tax counsel”, she accepts that she “did not pay the appropriate stamp duty”.

She says that while she “did not own any other property at the time”, she’s since been told that she should have treated the purchase as if she were buying a second home because of complicated rules linked to a trust in her son’s name, which owns her family home in Ashton-under-Lyme.

Ms Rayner says the trust was set up in 2020 to manage compensation paid to her son “following a deeply personal and distressing incident” when he was a premature baby that left him with “life-long disabilities”. She says she sold her stake in the Ashton home to the trust in January this year and used that money as a deposit on the Hove flat. The sale follows her divorce in 2023 and, Ms Rayner says, allow her children to stay in the family home as part of a “nesting” arrangement.

Tax expert Dan Neidle posted on X yesterday that “it’s very unusual for someone to pay the wrong amount of stamp duty when they’re receiving tax advice.” He added: “There are probably three possibilities: (1) Ms Rayner got the law wrong (2) She didn’t take the right advice (3) She didn’t disclose all the facts to the law firm.”

Ms Rayner’s statement later that day says the “error”, which she “deeply regrets”, came about “due to my reliance on advice which did not properly take account of these provisions”. As it stands, we haven’t seen any details of the initial advice she received or what information she provided to the lawyers.

Ms Rayner should have paid £70,000 in stamp duty on the £800,000 purchase, meaning she’s underpaid by £40,000.