Angela Rayner, Trusts and the complexities of Stamp Duty

Deputy Prime Minister Angela Rayner has been facing intense scrutiny over her property dealings, after it emerged she has underpaid £40,000 in stamp duty when purchasing a flat in Hove.  The controversy stems from her use of a trust set up for her disabled son, and how that affected her tax obligations. 

Angela Rayner originally believed she only owed the standard stamp duty rate of around £30,000 but later legal advice revealed she should have paid the higher rate surcharge, because under the rules her existing home still counted as a property interest.  That difference left her exposed to accusations of mismanagement, hypocrisy and an ethics inquiry.

So how do Trusts affect Stamp Duty?

Most people think of stamp duty land tax (SDLT) as straightforward; if you buy a property above a certain threshold you pay a certain percentage, but things get complicated when Trusts are involved as follows: 

1. Bare Trusts
2. Discretionary or Interest in Possession Trusts
3. Transfers into Trusts
4. Trusts and the Deeming Rules 

A Bare Trust is where the beneficiary has an absolute right to the property. For SDLT purposes the beneficiary is treated as the owner so that the tax liability is based on their own personal circumstances. 

If Trustees purchase property, the trust itself is liable for stamp duty. The higher 3% surcharge for additional properties can still apply, even if the trust exists for family or support purposes. 

Moving property into a trust can itself trigger stamp duty depending on whether money (or a mortgage) is changing hands.  Even if no cash changes hands, if there is a mortgage liability transferred stamp duty may still be due. 

HMRC applies deeming provisions, meaning that if someone is a beneficiary or trustee of a trust holding property they may still be treated as owning another home.  This is often where unexpected tax bills arise and it appears to be the basis of Angela Rayner’s case. 

Why does it Matter?

The Angela Rayner controversy highlights what many property buyers discover the hard way. Trusts do not always protect you from stamp duty liabilities.  In fact they can make things far more complex.

For ordinary families, trusts are often set up for good reasons i.e. to safeguard children, provide for disabled dependents or manage inheritance.  Yet the tax system still applies strict rules to prevent people from using trusts as loopholes to avoid stamp duty. 

The Angela Rayner case is a vivid reminder that:

• Trusts and stamp duty are a legal minefield.
• Even well meaning arrangements can create unexpected tax bills
• Public figures face an even higher bar of accountability where perception matters as much as legality. 

The above is not just about one politician’s house move it is about the complexity of the tax system that can be hard to navigate without expert legal advice. 

For personalised advice and support, please contact our Private Client team who will be more than happy to assist you.