Stamp duty is a “confusing mess” according to one tax expert, after Deputy Prime Minister Angela Rayner resigned from Government following an investigation after she underpaid the tax on a seaside flat.
Ms Rayner, who was also Housing Secretary, admitted that she underpaid stamp duty on the £800,000 flat she bought in Hove earlier this year.
She said she “did not meet the highest standards” in relation to the property deal and stressed it was never her intention “to do anything other than pay the right amount” as she resigned.
The bigger point: stamp duty is a confusing mess. The tax shouldn't exist. The second home surcharge is daft.
— Dan Neidle (@DanNeidle) September 3, 2025
Why are we taxing someone who buys two £500k homes £55k (£15k + £40k),
But someone who buys one £1m home £43k?
Where's the logic?
Ms Rayner disclosed earlier this week that she had bought the Hove property after selling her stake in another home to her son’s trust.
She had faced mounting pressure after media reports claimed she had saved £40,000 in stamp duty on the flat because she removed her name from the deeds of a family property in her Ashton-under-Lyne constituency.
Ms Rayner said she had believed, on legal advice, that she was liable for the standard rate of stamp duty, but was later advised that, although she did not own any other property at the time of the purchase, complex provisions relating to the trust “gives rise to additional stamp duty liabilities”.
Housing market experts emphasised the importance of home-buyers taking specialist advice and double-checking paperwork when understanding how much they owe.
Stamp duty applies in England and Northern Ireland. Scotland and Wales apply separate property taxes.
The tax applies in “slabs”, with home buyers paying increasing portions of the property price when they purchase a residential property, such as a house or flat.
For example, the current “nil rate” band for a home-mover purchasing a property as their only home is £125,000, having recently been reduced from a higher threshold of £250,000 from April this year.
Home-buyers usually have to pay 5% on top of stamp duty rates if buying a new residential property means that they will own more than one, although in some cases buyers may not have to pay the extra 5% if they are replacing their main home and selling their previous one.
Posting on X, Dan Neidle, founder of Tax Policy Associates, said that in situations where people are buying a house and “everything is simple, you can ask your conveyancer how much stamp duty to pay”.
But he said that in complex situations “this is a very bad idea”.
Mr Neidle added: “The bigger point: stamp duty is a confusing mess. The tax shouldn’t exist. The second home surcharge is daft.
“Why are we taxing someone who buys two £500k homes £55k (£15k + £40k), but someone who buys one £1m home £43k? Where’s the logic?”
Property expert and TV presenter Kirstie Allsopp posted on X: “I’ve always wanted everyone to understand that the so called 2nd home surcharge is a vicious little tax which catches people at some of the most difficult stages of their life (sic).
“If Angela Rayner didn’t understand how it worked then how are the rest of us supposed to?”
Speaking generally about trusts, Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said: “If you transfer your property into a trust, you are effectively giving away ownership of that property.
“The tax treatment will depend on whether that is done during life or on death, whether you continue to be able to benefit from the use of that property or any income it generates, who can potentially benefit from the trust and how they are able to benefit.”
He said some people may want to put a property into trust during their lifetime because: “It may be that you want to gift that property to someone else, but don’t want to put that property outright in their hands, perhaps because they are too young.”
David Hollingworth, an associate director at L&C Mortgages, said that trust arrangements are not something that most home-buyers would need to factor into their situations.
Speaking generally about stamp duty, Mr Hollingworth said: “Stamp duty land tax has only become more complicated with the surcharge on additional property, so taking specialist tax advice becomes all the more important.
“The more complex the situation the more specialist that advice will likely need to be.”
Nathan Emerson, chief executive at property professionals’ body Propertymark, said: “Buying and selling property consistently ranks as both a stressful process but also one that constantly evolves, with many people being infrequently involved in it.
“In practice, understanding what tax might be due when purchasing a property will likely be unfamiliar to many people.”
He continued: “Any amount due will be truly individual and can vary based on many aspects, such as whether you are a first-time buyer, the price of the property being purchased, or if you are maybe purchasing an additional property, for example.
“You must ensure that you double-check all submitted paperwork and that all figures stated are correct and represent the true picture.
“Within this process, it is always advisable to consider professional advice and fully understand what might be due before submitting all relevant information.”
Colleen Babcock, a property expert at Rightmove, said: “Whilst most home-movers are unlikely to find themselves in more complex situations, it’s worth checking in with your conveyancer early in the process about how much stamp duty you’re anticipated to pay, particularly as it needs to be paid within two weeks of the transaction in England.
“Nevertheless, stamp duty is a confusing and outdated tax in many ways, which is why we’ve called for reform to the system many times.”
In a statement, Ms Rayner, who was divorced in 2023, said earlier this week she had agreed to a “nesting arrangement” where the children remained in the family home.
She said a court-instructed trust was established in 2020 “following a deeply personal and distressing incident involving my son as a premature baby”.
The statement continued: “He was left with life-long disabilities, and the trust was established to manage the award on his behalf – a standard practice in circumstances like ours.
“To ensure he continued to have stability in the family home, which had been adapted for his needs, we agreed that our interest in the family home would be transferred to this court-instructed trust of which he is the sole beneficiary.
“Some of the interest in our family home was transferred to the trust in 2023.”
In January 2025, Ms Rayner said she sold the remaining interest in the property to her son’s trust.
The statement said: “We transferred the property because it was in the best interests of our child. I acted as any parent would.
“The sale of the property in Ashton-under-Lyne to the trust has not altered my family life. It remains my family home, as it has been for over a decade.”
After selling her stake to the trust, Ms Rayner said she bought the Hove property in May 2025, using the lump sum from selling her stake in her Ashton home, “which was the only property I owned and where my savings were”, for the deposit on my new one.
She said she obtained a mortgage to finance the rest.
Ms Rayner said that, when buying the property: “My understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty.
“However, given the recent allegations in the press I have subsequently sought further advice from a leading tax counsel to review that position and to ensure I am fully compliant with all tax provisions.
“I have now been advised that although I did not own any other property at the time of the purchase, the application of complex deeming provisions which relate to my son’s trust gives rise to additional stamp duty liabilities.
“I acknowledge that due to my reliance on advice from lawyers which did not properly take account of these provisions, I did not pay the appropriate stamp duty at the time of the purchase.”
Ms Rayner said she is working with lawyers and with HM Revenue and Customs to resolve the matter “and pay what is due”.
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