Independent adviser finds breach of ministerial code over Hove flat tax underpayment; Chancellor expected to stay as No 10 moves to reset the top team.
Sir Keir Starmer is preparing a Cabinet reshuffle after Angela Rayner resigned as deputy prime minister, housing secretary and deputy leader of the Labour Party on Friday 5 September, following an inquiry into her stamp duty affairs on a flat in Hove valued at about £800,000. The independent adviser on ministerial standards, Sir Laurie Magnus, concluded she had breached the ministerial code by failing to pay the correct amount of tax, although he said she had acted in good faith.
In a resignation letter to the prime minister, Rayner wrote: “I deeply regret my decision to not seek additional specialist tax advice” and added, “I take full responsibility for this error.” She also cited the toll on her family as a factor in stepping down. Starmer replied that he was “very sad” to be losing her from government while acknowledging she had reached the right decision.
Downing Street sources have confirmed a reshuffle will now follow. Chancellor Rachel Reeves is expected to remain in post, with other changes to be set out later today. Media and wire services reported the estimated underpayment at around £40,000 and said the departure is a political setback for Starmer little more than a year into office.
Rayner acknowledged earlier this week that she underpaid stamp duty land tax on the Hove purchase after initially believing she was liable only for the standard rate. The issue arose from complex trust arrangements for her disabled son and how those interact with stamp duty rules. Sir Laurie’s letter states she received written assurances at the time that did not constitute expert tax advice and that specific advice would likely have indicated a higher rate was payable. Rayner referred herself to the adviser on Wednesday 3 September and worked with HMRC to correct the error.
Under the ministerial code, breaches do not automatically require resignation; sanctions depend on the severity and circumstances. Labour in government strengthened the independence of the standards adviser, including the ability to initiate investigations and publish findings more readily. In this case, Rayner chose to resign after the adviser’s conclusions.
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The case has renewed attention on the higher-rates regime for additional properties in England and Northern Ireland. Government policy raised the surcharge on additional dwellings from 3 to 5 percentage points from 31 October 2024, with detailed rate bands changing again from 1 April 2025. The Hove property is subject to stamp duty land tax, which is distinct from Scotland’s devolved Land and Buildings Transaction Tax.
Markets and Westminster will focus on the extent of Starmer’s reshuffle and on Labour’s legislative programme in areas Rayner championed, including employment reforms, renters’ rights and planning. Early reports suggest continuity at the Treasury while attention turns to replacements for the deputy prime minister and housing briefs.
