There is still a great deal of confusion as to what the Capital Gains issue surrounding Angela Rayner is about – it is not as simple as Angela Rayner providing evidence that Vicarage Road was her primary residence. Even if she spent most of her married life as a newlywed between 2010 and 2015 at Vicarage Road it would still seem, to me, to be very unlikely it was her main residence for tax purposes.
In her Newsnight interview Angela Rayner said, fairly enthusiastically, she did not know the married couple rules around CGT when she sold her property. As that’s the case it seems reasonable to assume that she did not know to make a nomination under TCGA 1992 s255(5)(a), [unless a solicitor said “sign here”], even though she wouldn't directly say so.
If she did not nominate Vicarage Road, her main residence will be determined by the facts of their joint residence as a married couple. So consider the facts. Where did Angela Rayner spend most of her time? Where did Mark Rayner spend most of his time? Did he spend any time at all at Vicarage Road after they were married? Remember, whatever is determined to be her primary residence is also his primary residence, because they were married.
I’m going to stick to what she says, rather than take evidence from what neighbours have reportedly said, and see if we can draw any conclusions.
“Vicarage Road was my principal property but when my children were born, I would spend time at Lowndes Lane because my children … I had a teenager and two babies. My son was born at 23 weeks. I spent eight months in intensive care with him, I wasn’t really bothered about where my clothes were on a certain night. But my house was my house at Vicarage Road and I paid all my bills there, that was my home.
But I did spend time at Lowndes Lane at times, of course I did. And then when I sold Vicarage Road, I lived at Lowndes Lane because I didn’t have a house and I registered there when I moved in there. But there was never any deceivement (sic) or any problems with, or any question about avoiding capital gains or not saying what was right on the electoral roll. That was my house.”
Whilst it may seem logically fair that if Angela Rayner spent 75% (made up number) of her time at Vicarage Road that is her main residence that is not what the rules state. What you would also be saying would be that Vicarage Road could be Mark Rayner’s primary residence without him actually stepping foot in the property, and suddenly it doesn’t seem quite so plausible. At no point can I find that anyone, even a neighbour, has claimed Mr Rayner has spent any part of their married life living at Vicarage Road. Remember, whatever was her primary residence was his primary residence – it’s not just about her and her bills, it’s also him and his bills. If she has a small residence footprint at Lowndes and a large residence footprint at Vicarge Road, but he has his entire residence footprint at Lowndes Lane, then it would almost certainly be determined that as a married couple their main residence for tax purposes would be Lowndes Lane, and Private Residence Relief could not be claimed on the sale of Vicarage Road for the period in question.
I don’t think it’s necessary for Angela Rayner to publish the tax advice. However, the claim that she had no tax to pay because she was selling her main home is, at best, insufficient – a) because it seems unlikely it was her main residence for tax purposes and b) even if it was, Lowndes Lane was not their main residence for the same period and that property was also sold a year later.
This is a point that is regularly missed. There is a CGT question to answer regardless of whether Vicarage Road was Angela Rayner's main residence. Married couples can only claim an exemption from one property for any period. If Vicarage road was exempt for 2010-2015 then Lowndes Lane was not and vice versa.
If there was no CGT to pay on either property it can only mean there was no capital gain, not because they were exempt, which means there must have been some allowable enhancements. I don’t think it’s unduly invasive for Angela Rayner to state why there was no CGT to pay, e.g, we had a loft conversion, or a conservatory, or an extension etc. She doesn’t need to publish her advice, but without a proper explanation the question mark will always be there.
One thing we do know is that her original explanation is insufficient, which has led this to be more of a story than it perhaps needed to be.
“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.”
As is now becoming quite bizarrely widely known, this is not how Private Residence Relief works for married couples.
To be clear, none of this will be subject to a police investigation – this is an HMRC issue. If there are questions about false information on voter registration forms etc this may be a matter for a police investigation, but isn’t something I intend to comment on.
Is this a big deal? Is it in the public interest? Making a CGT mistake with a small liability is not a big deal at all – barely newsworthy. Being opaque about it makes it a bigger deal than it need be – like anything else it provides a narrative to her reputation – if she’s not transparent about this, what else would she not be transparent about? It’s a trust issue, and Angela Rayner has been the first to demand action when the trustworthiness of others has been called into question.
It also begs the question, "why not just say?". No-one is asking for 15 years of CGT history. As I say, contrary to Michael Gove's comments, I don't think it's necessary for her to publish anything - just provide an explanation that makes sense. One of:
"We made a joint nomination for Vicarage Road to be our main residence, so no CGT was payable." Followed by "When we sold Lowndes Road a year later there was a CGT liability which we paid" or "When we sold Lowndes Road a year later there was no CGT liability because we converted the loft/built an extension etc and with other allowable expenses the CGT liability was zero".
"We didn't make any nomination for Vicarage Road to be our main residence, so contrary to my earlier statement this wasn't our main residence." Followed by "However, having taken expert advice, because we converted the loft/built an extension etc and the other allowable expenses, the CGT liability was zero" or "We did not realise this at the time and acted in good faith - I do have a small unpaid CGT liability and I have contacted HMRC to arrange payment".
None of which impinges on her privacy at all, or damages her reputation in any way. The only way her reputation would be damaged is if she acted dishonestly, and I am not suggesting she has, or if valid questions remain unanswered. If she has acted in good faith throughout it's difficult to see why she has allowed this story to rumble on.