Angela Rayner resigns after underpaying tax on Hove flat

Angela Rayner has resigned as deputy prime minister and housing secretary after failing to pay enough tax on her £800,000 flat in Hove.

She has also stepped down as deputy Labour leader, a move which is expected to trigger a new deputy leadership election by party members.

Her departure comes after the prime minister’s ethics adviser Sir Laurie Magnus said Rayner had “acted with integrity” but concluded that she had breached the ministerial code.

He said she did get legal advice when buying the property, but failed to seek further expert tax advice as recommended.

Writing to the PM, Rayner said she accepted she “did not meet the highest standards” when purchasing her property.

“I deeply regret my decision to not seek additional specialist tax advice given both my position as housing secretary and my complex family arrangements.”

Rayner said she took “full responsibility for this error”, adding: “It was never my intention to do anything other than pay the right amount.”

Her resignation is a huge blow for the prime minister who began the week with a shake-up of his Downing Street team in the hope of putting a difficult first year in government behind him.

It also kicked off a big reshuffle of ministers at the top of government, with David Lammy leaving his foreign secretary role to replace Rayner as deputy prime minister.

Lammy also takes on the justice secretary role, while Shabana Mahmood moves to the Home Office and Yvette Cooper becomes foreign secretary.

Steve Reed becomes the new housing secretary, a role which will see him responsible for delivering on one of the government’s key pledges of building 1.5 million homes by 2029.

Other ministers to be moved include Liz Kendall from work and pensions secretary to the Department for Science, Innovation and Technology.

Details of a deputy leadership election are expected to be announced in due course.

The contest could create a severe political headache for the prime minister, as it has the potential to become a vehicle for MPs and members to voice their discontent at Sir Keir’s leadership.

In a handwritten reply to Rayner, Sir Keir said: “Although I believe you have reached the right decision, it is a decision which I know is very painful for you.

“You have given your all to making the Labour government a success and you have been a central part of our plan to make Britain fairer for working families.

“On a personal note, I am very sad to be losing you from the government. You have been a trusted colleague and a true friend for many years. I have nothing but admiration for you and huge respect for your achievement in politics.”

He concluded that Rayner would remain “a major figure” in the Labour Party.

Conservative leader Kemi Badenoch said: “Angela Rayner is finally gone. But it’s only because of Keir Starmer’s weakness that she wasn’t sacked three days ago.”

Rayner was first elected as an MP to the Greater Manchester constituency of Ashton-under-Lyne ten years ago.

She had been on the Labour frontbenches since 2015 and took on her government jobs in July 2024, when Labour won the general election.

As well as becoming one of the most powerful figures in government, Rayner was also popular with Labour backbenchers.

However, her political fortunes began to turn last week when newspapers including the Daily Telegraph and Daily Mail raised questions about the amount of tax she had paid on her flat purchase.

Rayner’s team initially insisted she had paid the correct amount but, as a result of the media scrutiny, sought advice from a senior lawyer.

On Wednesday, after receiving the lawyer’s final opinion, Rayner acknowledged she had not paid enough tax when buying her East Sussex flat and said the “mistake” came about because she believed it was the only property she owned.

However, due to complex arrangements surrounding a trust for her disabled son, the Hove flat should have been considered to be Rayner’s second home – meaning she should have paid an additional £40,000 in stamp duty.

Rayner said she had sought legal advice when making the purchase but that it had failed to “properly take account” of her circumstances.

She said she had contacted HMRC to work out the additional tax she needed to pay and referred herself for investigation by the PM’s standards adviser.

After investigating the matter, ethics adviser Sir Laurie concluded that Rayner “cannot be considered to have met the ‘highest possible standards of proper conduct’”.

In his letter to the prime minister, he said it was “deeply regrettable” that Rayner had not sought the correct tax advice.

He said if such expert tax advice had been received, it would “likely” have advised her that a higher rate of stamp duty was payable.

Sir Laurie concluded: “The responsibility of any taxpayer for reporting their tax returns and settling their liabilities rests ultimately on themselves alone.”

In addition to paying an extra £40,000 in stamp duty, Rayner could also face a possible HMRC fine of £12,000 for a “careless” error in her tax arrangements.

At the same time as Rayner announced her decision to quit, Reform UK’s party conference in Birmingham was getting under way.

Moving his speech forward by several hours, party leader Nigel Farage told conference delegates: “You simply can’t get away from being the housing secretary and avoiding £40,000 of stamp duty.”