Angela Rayner faces new questions over tax on homes

Angela Rayner is facing new questions about her financial affairs after it emerged that capital gains tax may be owed on another property.

Ms Rayner, Labour’s deputy leader, insists that a house she sold for a large profit in 2015 was her main residence – which, if true, means her husband Mark Rayner should have paid capital gains tax on a property he sold the following year.

Tax experts said the couple would have had “two bites of the cherry” if neither paid capital gains tax when the properties were sold.

Police are investigating multiple allegations against Ms Rayner, with at least a dozen officers assigned to the case.

The Conservatives said her version of events “makes absolutely no sense” and her failure to pay tax could no longer be written off as “some kind of innocent error”.

Ms Rayner is facing scrutiny over whether she or her husband paid the right amount of capital gains tax when two properties they owned simultaneously during their marriage were sold; whether she broke electoral law by registering the wrong address as her permanent address; and whether a single person’s discount on council tax was wrongly claimed at one of the properties.

Stephen Watson, the Chief Constable of Greater Manchester Police, has promised to “get to the bottom of what happened” when the couple, now estranged, owned nearby homes in Stockport.

Until now, questions around capital gains tax have centred on a former council home in Vicarage Road that Ms Rayner purchased under the right to buy scheme in 2007 and sold in 2015 for a profit of £48,500.

She has insisted it was her primary residence and therefore exempt from capital gains tax. In February, she posted on social media: “As with the majority of ordinary people who sell their own homes, I was not liable for capital gains tax because it was my home and the only one I owned.”

However, married couples cannot legally have two primary residences for tax purposes. Tax experts have said that if Vicarage Road was her main residence and she did not pay capital gains tax on it, it would have automatically become her husband’s primary residence for tax purposes too.

Instead, the house her husband owned around a mile away on Lowndes Lane would have been subject to capital gains tax when it was sold.

He would only have been able to claim private residence relief  – the kind of tax relief that  means you do not pay capital gains tax on the sale of a house if it was your only home – for some of the time he owned the Lowndes Lane property.

Nimesh Shah, a tax expert and the chief executive of Blick Rothenberg, said: “Married couples are only permitted to claim private residence relief [on capital gains tax] on one property.

“If Mark Rayner has claimed PRR on Lowndes Lane in full, the Rayners have certainly had two bites of the cherry and it seems highly implausible, under the PRR rules and what we know, that that would have been possible.”

Mr Rayner, a Unison official, bought the Lowndes Lane house in 1991. Records for the price he paid are not publicly available, but in 1996 a similar house in the street sold for £39,000.

He sold the Lowndes Lane property in 2016 for £145,000, suggesting a potential profit of more than £100,000. If it was not his main residence, he would have been liable for CGT running into several thousand pounds, even accounting for the fact that he would be given relief for the period before he married, when the house was unquestionably his main home.

If it was subject to capital gains tax, Mr Rayner would be liable to pay around 15 per cent of the full CGT liability on the total profit, because under HMRC rules a percentage of CGT is deducted for every month that a property was someone’s main residence.

In Mr Rayner’s case that was from 1991, when he bought it, until September 2010, when the couple married.

Capital gains tax would be liable for the months between the wedding and the sale of Vicarage Road in March 2015, when Lowndes Lane became the couple’s only residence, minus an 18-month grace period that married couples were given while they sorted out their living arrangements.

At the weekend, a spokesman for Ms Rayner said that she “spent time at her husband’s property when they had children and got married, as he did at hers. The house she owned remained her main home”.

A Labour source said the issue of whether Mr Rayner paid capital gains tax on Lowndes Lane was not a matter for the party or Ms Rayner, and that she had no CGT liability on the sale of the property.

A Conservative Campaign Headquarters source said: “Angela Rayner’s version of events makes absolutely no sense, and everyone apart from Keir Starmer can see that.

“Both houses cannot be exempt from capital gains tax, and it’s becoming increasingly clear that this cannot be written off as some kind of innocent error.”

Stockport council and the police are understood to be reviewing whether Ms Rayner claimed a single person’s council tax discount on her former house on Vicarage Road while allowing her brother to live there.

If her brother was living at the property with her, as she claims, she would not have been eligible for the discount because there can only be one adult resident in the property.

It also raises the question of whether Mr Rayner was claiming the discount at his Lowndes Lane home, to which he would not have been entitled if Ms Rayner was living there with him.

It is not known whether any of the family claimed the discount. The council has so far declined to say whether it has handed over any documents to police.

Alongside the council and capital gains tax claims, Ms Rayner has also been accused of wrongly declaring her permanent address on the electoral register, which is an offence. After they married in 2010, she re-registered the births of her two sons giving the Lowndes Lane address as their home.

The police investigation centres on the fact that she was registered on the electoral roll at the Vicarage Road house but is alleged to have been living at her husband’s home at the time.

At Prime Minister’s Questions on Wednesday, Rishi Sunak, the Prime Minister, told Sir Keir Starmer, the Labour leader, that he should spend less time focusing on Liz Truss’s recently-released book and more time reading Ms Rayner’s tax advice.

Ms Rayner has said she will “do the right thing and step down” if she is found to have committed a criminal offence. She claims to have taken expert advice to “make sure she hadn’t done anything wrong” and said the advice categorically stated that she did not owe any tax on her Vicarage Road property.