Angela Rayner may not be able to afford the mortgage on her £800,000 Hove property after her salary was significantly reduced following her government resignation.
The former deputy PM has been hit with a £50,000-plus tax bill and penalty for “carelessness” over unpaid stamp duty on a flat, a misstep that marked the start of her professional downfall.
In response to the findings, Tories demanded she lose her £16,876 severance payment, because whilst in opposition, she voted to stop ministers under investigation getting a payout.
Kevin Hollinrake, the Tory party chairman, said: “If she has any integrity, then surely she must decline any severance payment.”
Ms Rayner’s salary will be reduced from £161,409 to £93,904 – marking a loss of £67,505 – significantly reducing her breathing room for making her monthly mortgage repayments.
Earlier in the week, she confessed she had put her life savings down on the flat’s deposit. To finance it, she sold her 25 per cent stake in the family home in Ashton-under-Lyne in Greater Manchester for £162,500, which went towards a £150,000 deposit on the property in Hove.
According to official documents, she secured a £650,000 mortgage on the seaside flat through NatWest.
Due to the size of the loan, she is expected to be paying £4,000 in mortgage repayments, against an income of £5,400 a month after tax. While in her post as deputy prime minister, Ms Rayner was taking home £8,100.
Since her resignation, she will be left with £1,400 a month and two teenage children to look after.
She also faces a £40,000 tax bill, as well as a likely penalty of £12,000 plus interest – amounting to about £1,000 – a total bill of £53,000.
It will be up to HMRC to decide if she should pay the penalty for ‘carelessness’ for originally paying just £30,000 in stamp duty on the Hove flat, instead of £70,000.
It was determined that Ms Rayner broke the ministerial code in failing to seek proper tax advice when she bought the Hove flat.
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Ms Rayner, a 45-year-old mother-of-three has also lost her grace-and-favour flat in Admiralty House. She has the option to rent a flat in London through MPs’ expenses, but will still have to pay for her Hove apartment, as well as expensive train fares to and from the city.
According to one personal finance expert, unexpected tax bills can often result in bankruptcy for those on the receiving end.
The anonymous expert said: “One of the main reasons people get into financial difficulties, if you were to look specifically at people who have been made bankrupt, often it is a tax bill that will send them over the edge. It’s one of those things that people do fall foul of.”
There is no evidence that the bill will bankrupt Ms Rayner, but the expert said, “It is going to make life quite tough, and she’s going to have to make some changes in her life.”
She purchased the flat in May this year for its £800,000 asking price. But according to Zoopla, property prices in Brighton and Hove fell 1.3 per cent over the last year, which could make it very difficult for her to break even if she tried to sell the flat now.
The flat might also be trickier to sell now that vandals have targeted it – spray painting “tax evader” on the walls of the building.
It’s possible that Ms Rayner will decide to boost her income through public speaking, events, or even a publishing deal on her journey from being a single mother at 16 to deputy prime minister - would make good material for a memoir.
Ms Rayner has previously been amongst other Labour politicians to accept donations for clothes from Lord Alli – worth £200m – and may well turn to other donors for support now. In November last year, Ms Rayner declared £3,550 worth of clothes from Lord Alli before promising to stop accepting donations for her wardrobe.
She also faced backlash for enjoying Lord Alli’s $2.5m New York apartment for a holiday with her new partner, the former Labour MP Sam Tarry.
