Angela Rayner cleared by police and HMRC in capital gains tax probe

Angela Rayner has been cleared by the police and HMRC after a capital gains tax probe into the sale of her council house in 2015.

The deputy leader of the Labour Party faced accusations she had failed to declare £3,500, which led to a Conservative Party minister calling for an investigation into her tax affairs.

Ms Rayner has now been vindicated after HMRC and the police both dropped their investigation against her. While, they did not give a reason for this, it did emerge that Rayner had carried out a  kitchen renovation to the property, potentially meaning she could offset this against the capital gain on the property, meaning no tax on the gain was needed. 

Rayner has since taken a swipe at the Conservative Party claiming the investigation was "a waste of police time".

What was Angela Rayner's tax probe?

Angela Rayner faced claims she had failed to pay capital gains tax on a council house she sold in 2015.

Rayner owned the property with her now ex-husband, Mark Rayner, and sold the house for £127,500, making a profit of £44,500. 

Of this, 52% would be subject to tax, though £11,000 is exempt, leaving £12,140 potentially taxable and therefore £3,500 potentially owed to HMRC.

What was Ms Rayner's defence?

Ms Rayner claimed she abided by all tax obligations and that no capital gains tax was owed.

Originally she claimed the property was her main home, which - if she were not married - would mean no capital gains tax was owed due to primary residence relief. However, despite being separated from her husband, Rayner was married at the time, meaning she and her husband could only declare one home as their main residence. Given they owned another property, which her husband claimed was his main residence, it raised questions about how no capital gains tax was owed.

It later emerged that Angela Rayner may have been able to offset her kitchen renovation costs to help resolve her tax problem as it qualified as an "enhancement expenditure". This meant if this improvement was £12,140 or more then no capital gains tax would be owed as there was no longer a gain on the value of the house.

'We have seen the Conservative party use this playbook before'

Ms Rayner has now been cleared by both the police and His Majesty's Revenue and Customs (HMRC) 

Greater Manchester Police (GMP) conducted an investigation and decided no police intervention was necessary before passing information from its inquiry to HMRC who also cleared Ms Rayner of unpaid tax. 

Ms Rayner claimed the matter was a PR stunt by the Conservative Party as it was Conservative deputy chair James Daly who originally called for the investigation.

She stated: "We have seen the Conservative Party use this playbook before – reporting political opponents to the police during election campaigns to distract from their dire record. I am grateful to all those who have stood by and supported me and my family.”