Rayner quits over stamp duty controversy: should the tax be abolished?

When Angela Rayner, the now-former deputy prime minister and housing secretary, was caught underpaying stamp duty on her £800,000 seaside flat, it was widely expected that she would step down.

The government’s ethics adviser found Rayner had breached the ministerial code when it came to tax affairs.

Rayner had referred herself to the Independent Adviser of Ministerial Standards, Laurie Magnus, after an article in The Telegraph exposed the tax scandal.

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Rayner has been replaced by David Lammy, who previously held the foreign secretary role.

In her letter of resignation, Rayner said: “I deeply regret my decision to not seek additional specialist tax advice given both my position as housing secretary and my complex family arrangements. I take full responsibility for this error.”

Rayner, who was Keir Starmer’s right-hand woman, has put Labour in a deeply embarrassing position. A strong working class woman with the ability to help Labour connect with parts of the electorate, Rayner has been a role model in her now former role of deputy prime minister.

This is a blow Labour can not afford ahead of the Autumn Budget – a Budget that will be watched closely for potential tax hikes as chancellor Rachel Reeves continues to face mounting pressure to strengthen the economy.

Stamp duty problems

If there is one thing Rayner’s career-damaging mistake may have exposed, it is that stamp duty is unfair and unclear, and easy to avoid (clearly).

Yes, most taxes are deemed unfair – but the fact is stamp duty simply makes housing unaffordable as house prices remain high, it makes the market illiquid and makes it harder for people to buy a house or move.

It restricts labour mobility and is a barrier to economic growth. Economic growth that Reeves really wants.

The housing market is broken and stamp duty should be scrapped – the system does not lend itself to growth, but one that instead stifles it.

Stamp duty was introduced in 1694 - well over 300 years ago – as a way of putting a stamp on official documents to allow tax collection.

While Labour is not considering any such abolition of this hated tax, there have been rumours for it to be replaced by a new levy on properties priced over £500,000.

It could benefit some buyers, but we do not yet know the finer details of the real impact it could have, should such a property tax come into play.

People selling in London could be hardest hit, with the average property price now £566,000, according to the latest data from HM Land Registry.