The Deputy Prime Minister originally claimed that she did nothing wrong and had paid the full amount of stamp duty, but has since referred herself to the ethics watchdog.
Ms Rayner said she didn’t believe she had to pay the higher rate as she had put her stake in her constituency home into a trust, with her children as the beneficiaries.
The i Paper spoke to tax experts about the matter to hear their verdict on the debacle. Should Rayner have known the rules, or are they too complicated to understand?
The law on tax is complicated – but unfortunately for Rayner, complexity is not a defence. Ignorance of the law has never been an excuse, and when it comes to tax, HMRC makes this position clear.
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But, failing to take adequate care – for example, neglecting to seek tax advice – is in itself treated as an offence by HMRC. Civil penalties of up to 30 per cent of the tax due can apply in cases of carelessness, and in more serious circumstances the penalties can rise as high as 100 per cent or beyond.
Put simply, we all have to play by the same rules. Politicians included – especially if they want to be trusted by their public. Ms Rayner should be held to the same standard as any other taxpayer.
‘What hope do ordinary homebuyers have?’
Even the Deputy Prime Minister, with professional advice from three individuals, has fallen victim to this labyrinthine mess that is UK property taxes. If someone at Angela Rayner’s level can get it wrong, what hope do ordinary homebuyers have?
The solution is radical simplification, not endless technicalities. There are over 50 kinds of stamp duty relief – why so many?
As housing experts emphasise, buyers need specialist advice and must double-check everything, but this shouldn’t be necessary for basic property transactions.
Stamp duty legislation is complex. The tax was introduced in December 2003 in England and it has been amended many times since this date. However, the principle that a person has an interest in residential property if they have an interest in a trust [like Rayner has] is well understood by tax advisers.
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As such, the additional stamp duty charge of 5 per cent of the purchase price of the property is charged.
The complexity in this situation arises as the charge may appear completely illogical to the average buyer who knows they do not own another property, or if they are selling, that they will only own one property at any time.
The advisors to Ms Rayner needed full disclosure about the nature of the family trust – whether they did or not we don’t know yet.
‘This is a nuanced piece of tax law – I can see how Rayner got it wrong’
Adam Johnson, director and financial adviser, New Forest Wealth Management
The detail is this: once an asset is placed into a trust, if the beneficiary is under 18 and that beneficiary is your own child, then even if you are expressly excluded as a beneficiary yourself, you are still treated as owning the trust’s assets. That’s why the stamp duty position fell the way it did.
It does seem remarkable that someone in such a public position has been tripped up by such an obscure rule, and I can see how even experienced professionals might have given her that advice in good faith.
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