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HMRC internal manual

Capital Gains Manual

Private residence relief: dependent relative: rent free: payments made

ESC/D20For many years A has provided a residence to his father. His father pays the council tax each year. In one year A spent £2,000 redecorating the house. His father contributed £1,000 towards the cost. These payments by the father to his son and by the father direct to the local authority fall within ESC/D20 and so do not jeopardise A’s claim to relief under TCGA92/S226.

ESC/D20B buys a house for her mother, paying for it by a mortgage of £30,000. B pays the council tax of £400 each year. She also pays £200 each year on average on repairs and other outgoings in respect of the property. Her mortgage repayments are £3,000 each year to which her mother contributes £1,000.

B is not entitled to dependent relative relief and is not assisted by ESC/D20. She receives £1,000 each year from her mother which is treated, for this purpose only, as income receivable under Schedule A. Against that the expenses which would be deductible under Schedule A total £600 leaving her a net profit of £400. The mortgage payments of £3,000 are not deductible under Schedule A and so play no part in the computation.