I’m going to try to steer away from tittle tattle here and just explain what the Private Residence Relief (PRR) rules are, and what they mean for Angela Rayner’s tax liability. Any other issues surrounding the addresses used on birth certificates etc unrelated to CGT are beyond the scope of this article.
What do we know? So Angela Rayner bought her house on Vicarage Road in Stockport at a discounted rate under the right to buy scheme in 2007, and subsequently sold the property in March 2015 for a profit of c£48500. That doesn’t seem to be contentious.
She married Mark Rayner in 2010, and they separated in 2020. I'm speculating here but it could be she didn't want to sell the property in 2010 because she would need to pay back some of the discount she received when purchasing the property under RTB in 2007.
Mark Rayner’s property was sold in April 2016 for £145250. I'm not sure when it was purchased or at what price, but I would suggest this was quite a while ago – possibly pre-2004.
Rayner says, “I bought my council house back in 2007. I owned my own home, lived there, paid the bills there and was registered to vote there, prior to selling the house in 2015.”
“I've never been a ‘landlady’, owned a property portfolio or been a non-dom. 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.”
"My husband already owned his own home independently and I had an older child from a previous relationship.”
The contentious comments, for me, are “I was not liable for capital gains tax because it was my home and the only one I owned.” and “My husband already owned his own home independently”.
These comments are contentious because they seem to ignore the fact that they were married in 2010 and still married when both properties were sold.
Private Residence Relief allows for an exemption from CGT when you are selling your principal residence (indeed, it used to be called Principal Private Residence Relief). Most homeowners just own and live in one house at a time and needn’t concern themselves with the minutiae of the rules – just that they don’t need to pay CGT.
However, married couples who are not separated (generally with a separation order), are only permitted to claim PRR on one property. If they qualify (and I’ll assume that they do) they can nominate under TCGA 1992 s.222(5) which property they wish to be their principal residence.
“Fine, Rayner must’ve nominated Vicarage Road as her principal residence, problem solved.”
No. Because they are married it would be a joint nomination which means that Vicarage Road would also be Mark Rayner’s principal residence – remember married couples are only permitted one principal residence at any one time. So even if they properly nominated Vicarage Road it would mean, for the period 2010-2015, they could not claim PRR for the sale of the Lowndes Lane property in 2016.
So, either the Rayners’ calculated and paid any CGT for the Vicarage Road sale, or they did so for Lowndes Lane – they cannot claim full PRR for both. I think it’s quite possible Angela Rayner has made a mistake and was due to pay CGT on the 2015 disposal.
Rayner is a higher rate taxpayer, and the higher rate on gains from residential property is 28% - so £48500 x 28% = £13580?
Not that much in the whole scheme of things, but actually it will be much lower. So we know she owned the property before she was married from 2007-2010 – she can presumably claim PRR for that. In 2018 the final period exemption was reduced to 9 months, but in 2015 it was 18 months. So that’s 1.5 out of 5 years.
Also, the property was sold in March 2015, in the 2014/15 tax year – she became an MP in the 2015/16 tax year. I don’t know what her salary was at Unison, but it’s possible that she still had some basic rate unused, which would partially
reduce the rate to 18%.
The CGT annual exemption amount for 2014/15 was £11000, plus remove any expenses for buying and selling the property, and remove any allowable expenses for enhancements.
If we assume, and I’m making no allegation here because I simply don’t have all the facts, that Angela Rayner made a mistake it is likely her hypothetical CGT bill is in the region of £2500 to £3000.
Not a serious issue, and unlikely HMRC will see it as the type of error to pursue 8 years later. If she deliberately obscured her address to support the use of an exemption from CGT that would be a much more serious allegation, and politically not survivable.
Did she commit fraud to deliberately not pay CGT? For £3000? I’m going to stick my neck out and say, "no".