Keir Starmer was thrown into turmoil today as Angela Rayner unexpectedly resigned after breaching the ministerial code by failing to pay taxes amounting to tens of thousands of pounds.

Ms Rayner has stepped down from her roles as Deputy PM, Housing Secretary, and deputy Labour leader following the assessment by standards watchdog Sir Laurie Magnus.

Sir Laurie concluded that Ms Rayner had tried to act with ‘integrity’ but still fell short of the highest standards required in government.

In a letter to Sir Keir, she emphasized the ‘strain’ the situation had exerted on her family. She expressed her ‘deep regret’ for not seeking expert tax advice regarding her stamp duty obligation, despite having been explicitly advised to do so.

Downing Street published a handwritten response from the premier expressing his ‘sadness’ over the situation because Ms Rayner had ‘given her all’, though it was the ‘right decision’ to make.

Ms Rayner’s prospects had seemed increasingly grim after Sir Keir declined to dismiss the possibility of dismissing her yesterday, asserting he would ‘act’ based on Sir Laurie’s findings. Outraged lawyers emerged to criticize Ms Rayner for purportedly trying to make them ‘scapegoats’ for her underpayment of stamp duty.

The departure is another massive blow for the PM, already struggling to stabilise his government after a torrid summer of immigration protests. 

Ms Rayner’s resignation as deputy Labour leader – a separate elected post – triggers what could be a deeply divisive contest.

There are indications that Sir Keir will now attempt to move past the crisis by possibly conducting a broader reshuffle as soon as today—less than a week after initiating a ‘phase two’ relaunch.

Sir Laurie said in his report: ‘Given the conjunction of the acknowledged complexity of her family circumstances, her position in Government (most importantly as Deputy Prime Minister) and the consequences of getting such a calculation wrong, it is deeply regrettable that the specific tax advice was not sought.

‘I believe Ms Rayner has acted with integrity and with a dedicated and exemplary commitment to public service.

‘I consider, however, that her unfortunate failure to settle her SDLT liability at the correct level, coupled with the fact that this was established only following intensive public scrutiny, leads me to advise you that, in relation to this matter, she cannot be considered to have met the ‘highest possible standards of proper conduct’ as envisaged by the Code.

‘Accordingly, it is with deep regret that I must advise you that in these circumstances, I consider the Code to have been breached.’

Sir Laurie said: ‘She believed that she relied on the legal advice she had received, but unfortunately did not heed the caution contained within it, which acknowledged that it did not constitute expert tax advice and which suggested that expert advice be sought.

‘I am conscious of the acute challenges ministers face – perhaps uniquely – in managing the demands of their personal lives and their public responsibilities.

‘However, the responsibility of any taxpayer for reporting their tax returns and settling their liabilities rests ultimately with themselves.’

Ms Rayner wrote in her resignation letter to the PM: ‘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. I would like to take this opportunity to repeat that it was never my intention to do anything other than pay the right amount.

‘I must also consider the significant toll that the ongoing pressure of the media is taking on my family. While I rightly expect proper scrutiny on me and my life, my family did not choose to have their private lives interrogated and exposed so publicly.

‘I have been clear throughout this process that my priority has, and always will be, protecting my children and the strain I am putting them under through staying in post has become unbearable.

‘Given the findings, and the impact on my family, I have therefore decided to resign as Deputy Prime Minister and Secretary of State for Housing, Communities and Local Government, as well as Deputy Leader of the Labour Party.’

In his reply, 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 achievements in politics. I know that many people of all political persuasions admire that someone as talented as you is the living embodiment of social mobility.’

Senior figures have spent the past few days rallying around Ms Rayner since her extraordinary admission that she had failed to pay enough stamp duty.

Some have even suggested she is being persecuted for her working class background.

Bizarrely, even as Ms Rayner’s demise emerged this morning the PM’s official spokesman was still insisting Sir Keir had ‘full confidence’ in her.

Confirming that Sir Keir had received the report from Sir Laurie, the spokesman said: ‘The Prime Minister will read it and act upon it. He has a reputation for being comprehensive and quick.’

Ms Rayner gave a tearful interview on Wednesday in which she laid the blame for her troubles on her lawyers. 

The row escalated again last night after high street conveyancing firm Verrico & Associates insisted they had acted ‘on the figures and the information provided by Ms Rayner’.

In a withering condemnation, the family firm’s 82-year-old managing director Joanna Verrico said they were being made scapegoats and added: ‘I have got the arrows stuck in my back to show it.’ 

After days of stonewalling, Ms Rayner, 45, belatedly admitted underpaying £40,000 of stamp duty on the £800,000 seaside flat she bought in Hove in May.

She should have paid £70,000 instead of £30,000, but she blamed the ‘mistake’ on ‘legal advice that I received that said that I was liable to pay the standard stamp duty’.

Asked on Sky News this morning whether ministers should resign if they breach the rules, Mr Alexander said: ‘All these matters are a matter for the Prime Minister.’

Challenged whether he trusted Ms Rayner, the minister told Times Radio: ‘Listen, I really want to live in a country in which someone with Angela Rayner’s circumstances and background can rise to one of the highest offices in the country.

‘I have to say I should declare an interest – I really like Angela Rayner.

‘We’re a rather improbable group of friends. We come from very different circumstances … if you look at the challenges that Angela Rayner has overcome, not only do I like and respect her but, yes, I think she’s in politics for the right reasons.’

Last night her version of events was dealt a serious blow by Verrico & Associates, based in Herne Bay, Kent, which issued a bombshell statement saying it had calculated the stamp duty ‘strictly based on the facts and information provided to us’ – and that it did not offer tax advice.

Mrs Verrico, who founded the practice in 1994 assisted by her three daughters, later told the Telegraph: ‘We acted for Ms Rayner when she purchased the flat in Hove. We did not and never have given tax or trust advice. It’s something we always refer our clients to an accountant or tax expert for.

‘The stamp duty for the Hove flat was calculated using HMRC’s own online calculator based on the figures and the information provided by Ms Rayner. That’s what we used and it told us we had to pay £30,000 based on the information provided to us.

‘We believe that we did everything correctly and in good faith. Everything was exactly as it should be.

‘We probably are being made scapegoats for all this and I have got the arrows stuck in my back to show it. We are not an inexperienced firm, but we’re not qualified to give advice on trust and tax matters and we advise clients to seek expert advice on these.’

It is understood Ms Rayner argued that she received at least three pieces of legal advice, including from the trust overseeing her disabled son’s affairs as well as from a conveyancer, supporting her initial position.

But she has yet to reveal if any other lawyer gave her further advice to support her claim she had gone through proper channels and been misadvised.

MFG Solicitors of Kidderminster, which was involved in conveyancing at her family home in Ashton-under-Lyne, said it ‘did not act for Ms Rayner in the purchase of her property in Hove, nor did we provide any tax-related advice in relation to it’. And law firm Shoosmiths, which previously acted for her, also ruled itself out.

As the mystery grew over her flat purchase last week, Ms Rayner sought advice from a tax barrister – who told her this week that she had been wrong not to pay the higher amount of stamp duty, prompting her mea culpa on Wednesday.

Last night Dan Neidle, a tax expert who has advised the Labour Party, tweeted: ‘It’s looking increasingly like Ms Rayner didn’t actually obtain tax advice before this week.’

So far Ms Rayner, who is also the Housing Secretary, has refused to say which firms she consulted before the Hove transaction.

Verrico is a small conveyancing firm that does not employ any qualified solicitors.

Instead, they are licensed conveyancers who only focus on property advice.

The barrister who gave Ms Rayner the later advice is reported to have been Jonathan Peacock, a tax specialist who has been a KC for nearly 25 years. It is understood she commissioned him last Friday and received a draft opinion on Monday – the day the Prime Minister was still insisting she had done nothing wrong.

Conservative leader Kemi Badenoch said: ‘This is yet more damning evidence that Angela Rayner has not been honest with the British public.’