Angela Rayner’s £40,000 SDLT Error – and How You Can Avoid It

By Kate | September 10, 2025

The recent headlines about Angela Rayner’s property purchase may have caught your attention. While the political story has dominated coverage, the more important takeaway for most people is that Stamp Duty Land Tax (SDLT) is rarely straightforward. Where trusts or complex family arrangements are involved, the rules can be particularly difficult to navigate.

What appears on the surface to be a simple matter of buying or selling a home can quickly become complicated once HMRC’s ownership rules are applied. In this case, the purchase of a flat in Hove, East Sussex, has highlighted both the technicalities of SDLT and the risks of failing to seek specialist advice.

Although new details are still emerging, the underlying tax issues are highly relevant to anyone considering a property transaction where multiple properties, trusts, or shared family arrangements might be in play.

Table of Contents

The Background

From what has been reported publicly, a trust was created in 2020 to provide for Ms Rayner’s disabled child. Over time, shares in the family home were transferred into this trust. In early 2025, she sold her remaining interest in that property to the trust and then went on to purchase a flat in Hove.

She paid SDLT of £27,500, the standard rate for that transaction value. However, because of specific “deeming” rules in the SDLT legislation, HMRC treated her as still owning the family home. That brought her into the scope of the higher rates for additional dwellings, increasing the SDLT due on the Hove flat to £67,500. In other words, there was an underpayment of £40,000.

Understanding the SDLT Surcharge

The SDLT surcharge applies where an individual buys an additional residential property in the UK or abroad and still retains another dwelling. For many homeowners this is straightforward: if you only own your main residence, you are unaffected. But if you have a second property, such as a buy-to-let, a holiday home, or a home abroad, the surcharge applies.

There is an important exception where you are replacing your main residence. If you sell your existing home on the same day you complete the purchase of your new one, the surcharge does not apply. If you purchase your new home before your old home has sold, you will initially pay the surcharge and only later, once the original home has been sold, be entitled to reclaim it from HMRC. You must sell your old home within three years of buying your new one. To reclaim the surcharge, you then need to make your claim within 12 months of selling your old home, or within 12 months of the SDLT filing date for your new home – whichever is later.

Why the Surcharge Applied

The legislation is set out in Schedule 4ZA, Finance Act 2003. It provides that higher rates apply if, at the end of the day of purchase, the buyer is considered to own another property worth more than £40,000. Importantly, HMRC applies “deeming rules” which extend the definition of ownership beyond straightforward legal title.

One such rule treats parents as owning property where their minor child is the beneficial owner – or is treated as the beneficial owner – for example, under a bare trust or an interest in possession settlement. However, this does not apply to all types of trusts. There are exclusions where trusts are set up under the Mental Capacity Act 2005, but those did not apply here. As a result, even though the family home was transferred into a trust, Ms Rayner was still deemed to own it for SDLT purposes. That technical point meant the surcharge was payable on the Hove flat.

The Role of Trusts

Trusts are commonly used for inheritance tax planning and to protect vulnerable beneficiaries. They can provide stability, safeguard assets, and ensure ongoing financial support. In this instance, a trust was established to hold compensation awarded to Ms Rayner’s son following a medical negligence claim.

While such trusts are beneficial in many respects, they can create unexpected complications for SDLT. HMRC’s SDLT guidance explains that where a minor child is the beneficial owner or is treated as the beneficial owner, the parents are deemed to own that interest for the purposes of the SDLT surcharge. This rule does not extend to all types of trusts. This point proved decisive: even though legal ownership had been transferred, SDLT law still treated Ms Rayner as a property owner when she purchased her new home.

What This Means for You

This case demonstrates that SDLT rules are not always intuitive. You may believe you do not own any other property, but HMRC may interpret the situation differently in scenarios such as:

where you are a trustee or hold property in a fiduciary capacity
where your child is a beneficiary of a trust that owns a property
where family arrangements make it unclear which property is your “main residence”

It is also important to remember that SDLT is assessed at the time of the transaction. Later changes, such as a child turning 18 and taking over ownership, do not undo the liability that existed on the date of purchase.

Penalties and Careless Errors

When a tax underpayment arises, HMRC does not automatically impose penalties. Any penalty will depend on HMRC’s assessment of the taxpayer’s behaviour. A failure to take reasonable care may be treated as a ‘careless’ error, while deliberate actions attract higher penalties. In this case, it has been reported that two different professionals advised Ms Rayner that specialist tax input was needed, but she did not obtain it. HMRC could therefore view the underpayment as careless.

The maximum penalty for a careless error is 30% of the tax underpaid, although this can be reduced where the taxpayer cooperates fully. For instance, if the penalty were reduced to 20%, the amount payable would be £8,000.

The Compliance Challenge

For conveyancers and advisers, this case illustrates the difficulty of identifying SDLT issues where clients’ answers appear clear-cut. If a buyer confirms they own no other properties, SDLT will be calculated on that basis. But without careful questioning around trusts, overseas interests, or complex family arrangements, key details may be missed.

For buyers, the key message is that you cannot assume your situation is simple. If trusts or unusual ownership structures are involved, the risk of an unexpected SDLT charge is real.

The Key Lesson

This high-profile case reinforces a simple but vital point: SDLT is complicated, particularly where trusts or family arrangements exist. The safest approach is to ensure that all relevant facts are disclosed, and specialist advice is sought before completing a purchase.

At Mercian Accountants, we recommend obtaining tailored tax advice at the earliest stage of the buying process. Taking advice early can help you avoid unexpected liabilities, ensure you remain compliant with HMRC’s rules, and give you confidence that your transaction has been structured correctly in today’s increasingly complex tax environment. Contact us today.