The headlines surrounding the resignation of former Deputy Prime Minister Angela Rayner this week serve as a stark reminder of the importance of seeking the right professional tax advice.
The controversy arose from the purchase of her Hove flat, where it later emerged that higher rates of Stamp Duty Land Tax (SDLT) should have been paid. The underpayment has been reported at around £40,000. Sir Laurie Magnus, the independent adviser on ministerial standards, described the position as technically complicated and noted that Ms Rayner had relied on general guidance rather than specialist tax advice.
Importantly, she had been advised to seek expert counsel on more than one occasion, Sir Laurie Magnus later stating:
“that advice was qualified by the acknowledgement that it did not constitute expert tax advice and was accompanied by a suggestion, or in one case a recommendation, that specific tax advice be obtained”.
In her resignation letter, Ms Rayner acknowledged:
“I deeply regret my decision not to seek additional specialist tax advice given both my position as Housing Secretary and my complex family arrangements.
I take full responsibility for this error. I would like to take this opportunity to repeat that it was never my intention to do anything other than pay the right amount.”
Why tailored professional advice matters
The UK has one of the most extensive and intricate tax systems in the world. SDLT and LTT (Land Transaction Tax) are prime examples; while the basics seem straightforward, complications quickly arise when trusts, family structures, or multiple properties are involved. Even small technical details can change the outcome, and the liability, significantly.
For property transactions, SDLT applies in England and Northern Ireland, while in Wales, LTT applies. At Hodge Bakshi, we regularly see the consequences when individuals rely on general guidance, online calculators, or non-specialist advisers. Both HMRC (for SDLT) and the Welsh Revenue Authority (for LTT) report significant levels of underpayment and misreporting each year, which demonstrates just how easy it is to make mistakes in this area.
For standard property purchases, the SDLT calculation may appear clear-cut. But once factors such as trusts, marital status, or children's interests are added, the legislation becomes far more complex. At that point, tailored advice from an experienced tax specialist is essential. It can prevent not only unexpected and often punitive financial exposure but also, as this case has shown, serious reputational consequences.
What are the SDLT and LTT rules
In most cases, anyone who already owns one or more properties will face a higher rate of SDLT or LTT when buying an additional property.
Reliefs are sometimes available. For example, if the property being purchased is a replacement main (principal) residence, the surcharge does not apply provided the previous main home is sold at the same time or had been sold within the preceding 12 months. Even if the old home is sold up to three years after the new purchase, the surcharge can usually be reclaimed.
The situation becomes more complex where there is joint ownership, the precise tax treatment turning on the relationship between the owners.
What counts as “ownership” also requires careful consideration. Where a property is held in trust, an occupier may still be treated as owning it for SDLT and LTT purposes. In cases where the trust has been established for the benefit of a child, the parent can sometimes be deemed to hold an interest. This appears to have been a key factor in Ms Rayner's case making her Hove purchase count as an additional property.
The lesson here is clear: SDLT and LTT legislation contains multiple layers of complexity. What may look like a straightforward purchase can quickly become anything but. For that reason, we strongly recommend seeking professional tax advice in all but the simplest cases – and if in doubt, obtaining a second opinion before completing a transaction.
Although this bulletin specifically considers stamp taxes in relation to a property purchase, the same overarching principles apply to all UK taxes, which are often inextricably interwoven.
If you are considering buying property, holding property within a trust, or are unsure about the SDLT or LTT implications of your arrangements, we strongly recommend you speak to a qualified, professional adviser, contact us today.
Author
Sameer Bakshi | ACA CTA BFP
Director
How can we help?
Based in Cardiff, Hodge Bakshi is a leading firm of Chartered Accountants and Chartered Tax Advisers with over 40 years' experience serving businesses and individuals across South Wales and the UK.
Our specialist team at Hodge Bakshi has in-depth expertise in property and trust taxation. We work with clients across the UK to ensure that they are aware of the LTT and SDLT implications for their property purchases, ensuring that their transactions are handled correctly, the right reliefs are applied, and HMRC compliance is achieved with confidence.