How Rayner got mired in complex stamp duty web

Angela Rayner has disclosed she underpaid stamp duty on a seaside flat, claiming she received incorrect legal advice about a complex tax rule.

- ALBERT TOTH

Ms Rayner’s admission followed mounting pressure and media reports claiming she saved £40,000 on the property in Hove, East Sussex, by removing her name from the deeds of a family home in her Ashton-under-Lyne constituency.

Political opponents have clamoured for Ms Rayner's resignation over the issue, as the ministerial ethics adviser investigates the matter - probably deciding her political future.

The incident has also highlighted the intricate nature of stamp duty, which applies in "slabs", with homebuyers paying increasing portions of the property price when purchasing a residential property.

Here, The Independent looks at the issue and the deputy prime minister's position:

What are the rules around stamp duty?

For those buying their first home, or moving from one to another, stamp duty is usually quite straightforward. There are several rates liable on the purchase, ranging from zero to 12 per cent, based on its value.

When it comes to second homes, the rules can be more complex. The threshold at which the standard rates need to be paid is lowered, and there is also a 5 per cent surcharge which can rise with value.

Between £40,000 and £125,000, the surcharge rate is 5 per cent. This rises to a maximum of 17 per cent on properties worth over £1.5m.

Why did Rayner not pay enough tax on her Hove flat?

Ms Rayner referred herself to the ministerial ethics adviser on Wednesday after admitting, following days of silence, that she had wrongly listed her flat.

When purchasing the £800,000 property in Hove in May, she paid the standard rate of stamp duty, estimated to be £30,000. However, the higher rate for second homes would have made this as much as £70,000.