Angela Rayner has admitted underpaying stamp duty on the £800,000 purchase of her flat in Hove, blaming the "mistake" on poor legal advice.
The Deputy Prime Minister failed to pay the higher tax rate for additional properties, due to existing arrangements involving her family home in Greater Manchester.
The housing secretary has referred herself to the prime minister's standards advisor and contacted HMRC to resolve the £40,000 underpayment.
Tax experts say she could face an additional fine of up to £12,000 if HMRC finds she was "careless" with her tax affairs, even if she relied on professional advice.
The Labour deputy leader consulted three individuals before the purchase, but it's unclear whether any were fully aware of the trust arrangements involved in her finances.
Rayner has previously criticised Tory ministers over ethics and standards. Conservative leader Kemi Badenoch has called her position “untenable” and urged Sir Keir Starmer to sack her.
Starmer has stood by his deputy at Prime Minister's Questions, saying he was "very proud to sit alongside" her.