Britain’s deputy Prime Minister Angela Rayner is expected to leave the UK government following an investigation into her tax affairs by Sir Keir Starmer’s independent standards adviser, it is understood.

The British prime minister received the report by ethics watchdog Sir Laurie Magnus on Wednesday morning.

The deputy prime minister has faced mounting pressure to stand down over recent days after admitting she underpaid stamp duty on a flat she bought in Hove earlier this year.

Ms Rayner, who is also the Housing Secretary, paid £40,000 less of the surcharge on the property than she should have, as she claimed it was her main home rather than a second home.

She said she made a mistake based on legal advice she received at the time, before consulting a leading counsel, who found she was liable to pay a higher stamp duty rate, following headlines about her tax affairs.

In a letter published on Friday, 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.”

Ms Rayner told the Prime Minister in a letter that “I deeply regret my decision to not seek additional specialist tax advice” and took “full responsibility for this error”.

Sir Laurie said he believed she had acted in “good faith”, but that “the responsibility of any taxpayer for reporting their tax returns and settling their liabilities rests ultimately with themselves”.

In a resignation letter on Friday, Ms Rayner said: “I have long believed that people who serve the British public in government must always observe the highest standards, and while the Independent Adviser has concluded that I acted in good faith and with honesty and integrity throughout, I accept that I did not meet the highest standards in relation to my recent property purchase.

“I would like to take this opportunity to repeat that it was never my intention to do anything other than pay the right amount.”

Sir Keir said Ms Rayner would “remain a major figure in our party” and “continue to fight for the causes you care so passionately about” despite her resignation as his deputy, housing secretary and deputy Labour leader.

Losing the deputy prime minister will cause a headache for Sir Keir as he seeks to reset Government following a difficult summer dominated by criticism of the small boats crisis and speculation about tax rises in the autumn Budget.

Ms Rayner is popular among the Labour grassroots and is said to have played an important role in defusing the backbench revolt over proposed welfare cuts earlier this year.

She has been key to his political project, overseeing the manifesto pledge to build 1.5 million new homes as well as the Government’s flagship workers’ rights expansion, and is seen as a bridge between No 10 and the wider party.

Tory leader Kemi Badenoch criticised the Prime Minister for having waited for Ms Rayner’s resignation, saying her position had been “untenable for days”.

“Angela Rayner is finally gone. It says everything about Keir Starmer’s weak leadership that he had to wait for a report before acting,” she said.

Meanwhile, Reform UK leader Nigel Farage has brought forward his leader’s speech at the party conference in the wake of the scandal.

He will speak at 1pm, three hours earlier than previously expected.

Mr Farage has said there will be “splits” within Labour when it begins the process to elect a new deputy leader.