Yvette Cooper, seen in Downing Street this week, is the new foreign secretary. EPA
Yvette Cooper, seen in Downing Street this week, is the new foreign secretary. EPA
Yvette Cooper, seen in Downing Street this week, is the new foreign secretary. EPA
Yvette Cooper, seen in Downing Street this week, is the new foreign secretary. EPA

Yvette Cooper replaces David Lammy as UK Foreign Secretary in major reshuffle


Thomas Harding
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A major reshuffle in the British cabinet, sparked by the resignation of the deputy prime minister, has seen David Lammy elevated from his post as foreign secretary.

Only hours before he was due to take off for a flight to the Gulf for high-level meetings on Gaza, Mr Lammy was told by Prime Minister Keir Starmer that he would instead become deputy prime minister.

The British leader has attempted to make an opportunity out of a crisis by instigating a significant shake-up of his beleaguered government, following Angela Rayner’s departure for breaching the ministerial code through incorrect tax payments on a property transaction.

Mr Lammy, who will also hold the portfolio of justice secretary, is being replaced by Labour veteran Yvette Cooper, a stalwart of the Tony Blair years, who will leave her post at the Home Office.

Shabana Mahmood will become the first Muslim woman to head the Home Office after a successful stint as justice secretary that included tackling the issue of overcrowded prisons.

Mr Lammy had overseen the UK's response to the Gaza war and faced pressure from within Labour for a clearer stance on Israel's conduct in the conflict.

As he tried to build relationships with Arab nations he sought alignment on a Gaza ceasefire, access for humanitarian aid and progress toward a two-state solution.

He had been due to travel for meetings with Gulf nations focused on rebuilding Gaza after a ceasefire, before the reshuffle took place.

Mr Lammy had developed a strong relationship with US Vice President JD Vance as well as his French counterpart Jean-Noel Barrot.

Newly appointed Justice Secretary and Deputy Prime Minister David Lammy arrives at 10 Downing Street. Getty Images
Newly appointed Justice Secretary and Deputy Prime Minister David Lammy arrives at 10 Downing Street. Getty Images

Labour veteran

Ms Cooper will take on a significant portfolio, which will include navigating Britain’s path to recognising a Palestinian state at the UN General Assembly later this month.

The journalist-turned-politician has served every Labour prime minister this century.

As home secretary, Ms Cooper was handed the toughest job in government when the Labour returned to power in July 2024.

The task was to stop the flow of tens of thousands of migrants arriving on small boats to seek asylum in the UK.

The crisis has only grown during her tenure with more than 110,000 asylum seekers, a quarter of whom are living in hotels.

Several of these hotels have become flashpoints with flag-waving crowds demonstrating against the accommodation policy.

An Oxford and Harvard graduate, Ms Cooper is very familiar with US politics. Her husband, Ed Balls, is a former politician who presents breakfast TV and hosts a prominent political podcast.

A trained economist, she has been a leading figure in feminist politics and was the first minister to take maternity leave.

Crisis relaunch

Mr Starmer had promised to restore some stability to government after the years of Conservative chaos by stating that the holders of the major offices of state would remain in post for several years.

His hand was forced by Ms Rayner’s resignation after a week of negative headlines, although he had also been looking for the opportunity to “reset” his government after a year of turmoil and botched policymaking.

With Nigel Farage’s far-right Reform party surging in the polls, and Labour a good 10 points behind them, Mr Starmer hopes his drastic shake-up of government will bring about some stability.

However, that will come under severe pressure in November when Chancellor Rachel Reeves delivers her budget, which is intended to reverse Britain’s gloomy economic outlook.

Downing Street was quick to state on Friday that Ms Reeves would remain in post, but her political future is tied to the UK’s economic health.

  • Shabana Mahmood will replace Yvette Cooper as home secretary. EPA
    Shabana Mahmood will replace Yvette Cooper as home secretary. EPA
  • Newly appointed Chancellor of the Duchy of Lancaster and Chief Secretary to the Prime Minister Darren Jones arrives in Downing Street. PA Wire
    Newly appointed Chancellor of the Duchy of Lancaster and Chief Secretary to the Prime Minister Darren Jones arrives in Downing Street. PA Wire
  • Pat McFadden will become the secretary of state for Work and Pensions. EPA
    Pat McFadden will become the secretary of state for Work and Pensions. EPA
  • Steve Reed will be the new housing secretary. Getty Images
    Steve Reed will be the new housing secretary. Getty Images
  • Peter Kyle is the new business secretary. EPA
    Peter Kyle is the new business secretary. EPA
  • Liz Kendall is likely the new science secretary. EPA
    Liz Kendall is likely the new science secretary. EPA
  • British Secretary of State for Culture, Media and Sport Lisa Nandy retains her position. EPA
    British Secretary of State for Culture, Media and Sport Lisa Nandy retains her position. EPA
  • David Lammy will become the UK's deputy prime minister after Angela Rayner was forced to step down in a tax scandal. EPA
    David Lammy will become the UK's deputy prime minister after Angela Rayner was forced to step down in a tax scandal. EPA
  • Home Secretary Yvette Cooper will be appointed foreign secretary. EPA
    Home Secretary Yvette Cooper will be appointed foreign secretary. EPA
  • Leader of the House of Commons Lucy Powell is out. Getty Images
    Leader of the House of Commons Lucy Powell is out. Getty Images
  • Secretary of State for Scotland Ian Murray is also out in the cabinet reshuffle. Getty Images
    Secretary of State for Scotland Ian Murray is also out in the cabinet reshuffle. Getty Images

Code breach

Ms Rayner resigned as deputy prime minister, housing secretary and deputy leader of the Labour party after she was found to have breached the ministerial code of ethics. She underpaid the tax due on the purchase of a flat on the south coast while maintaining an interest in her constituency home in the north of England, through a trust which handles the affairs of her disabled son.

She had referred herself to the government’s ethics adviser Sir Laurie Magnus who swiftly investigated the case.

He stated that it was “deeply regrettable that the specific tax advice was not sought”.

Ms Rayner had failed to comply with the “overarching duty” on government ministers to “comply with the law and protect the integrity of public life”.

Sir Laurie said she had failed to meet the “highest possible standards of proper conduct”.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Updated: September 06, 2025, 12:03 PM