Why are Tories making an issue of Angela Rayner selling her council house?

Angela Rayner, seen here at a conference in Leeds, 1 March 2024, is coming under pressure to explain her personal financial affairs. Photograph: Ian Forsyth/Getty Images

Angela Rayner has faced questions over the last two weeks on whether she was liable to pay capital gains tax (CGT) on the sale of her former council house before she became an MP.

Labour’s deputy leader has said that there is no case to answer and has dismissed a string of stories in the Mail on Sunday based on claims in a book by Lord Ashcroft, a former Tory deputy chairman, as a “constant stream of smears”.

But she is coming under pressure to explain her personal financial affairs after a series of reports in the Mail on Sunday suggested she still has questions to answer.

What’s the background to the story?

Rayner lived in rented council properties before moving to one on Vicarage Road, Stockport. It is unclear when she moved there.

In January 2007, the then mum-of-one who worked as a local council care worker and union official for Unison bought the £79,000 property using the Right to Buy scheme first brought in by Margaret Thatcher in 1979.

As a result of the scheme she got 25% discount off the property’s asking price, which equated to £26,000.

A year after buying her first home Rayner had her second child, her first with then partner Mark Rayner, a Unison official. He already owned a home at Lowndes Lane, about a mile away.

Their son was born prematurely at 23 weeks, leading him to spend eight months in intensive care. Rayner has said she required continuing support from a wide network of friends and family, including her brother, during this period.

The couple decided to keep their separate properties during this period. It is unclear which property was her main residence or whether they lived apart. In 2010, the pair got married, a year after having their second child.

For the eight years she owned the Vicarage Road property, Rayner was registered on the electoral roll there. She was not registered to vote elsewhere and did not rent out the property during this time.

In March 2015, Rayner sold her home for £127,500, making a profit of £48,500. At this point, she was registered at this address on the electoral roll, until her husband sold his home in 2016.

What questions does she now face?

Homeowners have to pay capital gains tax after they have sold a home that has increased in value – but they are exempt if it is their main full-time residence. Substantial improvement costs can also be deducted from a homeowner’s CGT bill.

Married couples who both have individual properties can only have one main residence between them under tax law.

When reports about her property first emerged Rayner tweeted: “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.”

Sources close to her suggested that her thread on X, previously known as Twitter, was a “shorthand” account but it prompted further scrutiny from the media and tax experts on her understanding of her responsibilities under tax law.

According to Lord Ashcroft’s unofficial biography, Rayner re-registered the births of the two sons she had with Mark to her husband’s house in 2010. It is unclear which address was on their birth certificates previously.

As a result of the reports, Rayner has faced questions about where she lived for the first five years of her marriage as under electoral rules, voters are expected to register at their permanent address and could face penalties for providing false information.

Tax expert Dan Neidle told the Guardian: “Mark and Angela either nominated her property as their joint main residence so he (Mark) had tax to pay and she didn’t. Or a lot of building work was done on her property.

“I don’t think this is a very big issue, I don’t think there’s much tax to pay and I’m uncomfortable with forcing MPs to divulge their personal financial information.

“But seeing as this has got out into the public domain, it seems sensible for her to provide information otherwise people’s imaginations will conjure scenarios that are much worse than the reality.”

The reports also raised questions about Rayner’s purchase of her home under right-to-buy rules, which state tenants can only apply to buy their council house if it is their “only or main home”.

Is this damaging for Rayner?

Rayner has partly explained her family’s circumstances and said that she had taken expert tax and legal advice, although it is not clear when, which told her that she had not been liable to pay capital gains tax on the sale of her Vicarage Road home.

Keir Starmer has backed his deputy, insisting he has “full confidence in all of the answers she has given” on her tax affairs.

Tory MPs have already accused Rayner of “staggering hypocrisy” for wanting to reform Thatcher’s flagship policy as she had “personally benefited from the right-to-buy discount”.

Tory party sources say that they believe there is evidence of potential wrongdoing and intend to continue asking awkward questions in the run-up to the general election, believing that they have found a weak spot.