Angela Rayner has resigned as deputy prime minister and housing secretary after failing to pay enough tax on her £800,000 flat in Hove.

She has also stepped down as deputy Labour leader, a move which is expected to trigger a new deputy leadership election by party members.

Her departure comes after the prime minister’s ethics adviser Sir Laurie Magnus said Rayner had “acted with integrity” but concluded that she had breached the ministerial code.

He said she did seek legal advice when buying the property, but failed to seek further expert tax advice as recommended.

Writing to the PM, Rayner said she accepted she “did not meet the highest standards” when purchasing her property.

“I deeply regret my decision to not seek additional specialist tax advice given both my position as housing secretary and my complex family arrangements.”

Rayner said she took “full responsibility for this error”, adding: “It was never my intention to do anything other than pay the right amount.”

Sir Keir is expected to appoint a new deputy prime minister and a wider reshuffle of other ministers at the top of government has already begun with Lucy Powell and Ian Murray leaving their respective jobs of Commons leader and Scottish secretary.

Details of a deputy leadership election are expected to be announced in due course.

The contest could create a severe political headache for the prime minister, as it has the potential to become a vehicle for MPs and members to voice their discontent at Sir Keir’s leadership.

In a handwritten reply to Rayner, Sir Keir said: “Although I believe you have reached the right decision, it is a decision which I know is very painful for you.

“You have given your all to making the Labour government a success and you have been a central part of our plan to make Britain fairer for working families.

“On a personal note, I am very sad to be losing you from the government. You have been a trusted colleague and a true friend for many years. I have nothing but admiration for you and huge respect for your achievement in politics.”

He concluded that Rayner would remain “a major figure” in the Labour Party.

Conservative leader Kemi Badenoch said: “Angela Rayner is finally gone. But it’s only because of Keir Starmer’s weakness that she wasn’t sacked three days ago.”

Rayner was first elected as an MP to the Greater Manchester constituency of Ashton-under-Lyne ten years ago.

She had been on the Labour frontbenches since 2015 and took on her government jobs in July 2024, when Labour won the general election.

Her resignation leaves a big hole at the top of government, both as deputy PM and in her role at the housing department where she was responsible for delivering one of Labour’s key pledges – to build 1.5 million homes by the end of the Parliament.

On Wednesday, Rayner acknowledged she had not paid enough tax when buying her East Sussex flat and said the “mistake” came about because she believed it was the only property she owned.

However, due to complex arrangements surrounding a trust for her disabled son, the Hove flat should have been considered to be Rayner’s second home – meaning she should have paid an additional £40,000 in stamp duty.

On Wednesday Rayner said she had sought legal advice when making the purchase but that it had failed to “properly take account” of her circumstances.

She said she had contacted HMRC to work out the additional tax she needed to pay and referred herself for investigation by the PM’s standards adviser.

In his letter to the prime minister, ethics adviser Sir Laurie said it was “deeply regrettable” that Rayner had not sought the correct tax advice.

He said if such expert tax advice had been received, it would “likely” have advised her that a higher rate of stamp duty was payable.

Sir Laurie concluded: “The responsibility of any taxpayer for reporting their tax returns and settling their liabilities rests ultimately on themselves alone.”

In addition to paying an extra £40,000 in stamp duty, Rayner could also face a possible HMRC fine of £12,000 for a “careless” error in her tax arrangements.

At the same time as Rayner announced her decision to quit, Reform UK’s party conference in Birmingham was getting under way.

Moving his speech forward by several hours, party leader Nigel Farage told conference delegates: “You simply can’t get away from being the housing secretary and avoiding £40,000 of stamp duty.”

Following her resignation, some government ministers paid tribute to Rayner, with Chief Secretary to the Prime Minister Darren Jones saying: “Angela Rayner achieved a huge amount for the country this past year – record investment in council housing and better pay and rights at work.”

Environment Secretary Steve Reed said Rayner could be “proud of all you’ve achieved for our country and party”. (BBC)