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HMRC internal manual

Capital Gains Manual

Expenditure: enhancement expenditure: money's worth

To the extent that money’s worth is given for the purpose of enhancing the value of an asset, the money’s worth so given constitutes expenditure incurred. See Chaney v Watkis, 58TC707.

However, the following do not qualify as enhancement expenditure:

  • payments of rent and service charges in respect of a property held on lease - Emmerson v Computer Time International Ltd (in liquidation) 50TC628.
  • the value of an individual owner’s own labour on alterations and improvements to an asset - Oram v Johnson, 53TC319.

It may be worthwhile to examine critically a claim that money’s worth has been given as enhancement expenditure if

  • the recipient of the money’s worth is connected with the claimant, see CG14580+,or
  • there are any other grounds for suspecting that the enhancement of the value of an asset may not have been the sole purpose for which the money’s worth was given.

Make such examination with a view to establishing

  • whether the expenditure so incurred is expenditure wholly and exclusively on the asset for the purpose of the enhancement and
  • that the giving of money’s worth was not influenced, for example, by family considerations.