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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Private residence relief: dependent relative: rent free: xfer from

Where there is clear evidence of an explicit agreement, the transfer of the dwelling house from the dependent relative to the claimant is itself consideration received by the claimant for allowing the dependent relative to remain in occupation.

The word `consideration’ is being used in TCGA92/S226(1) in its legal sense as

`Anything regarded as recompense or equivalent for what one does or undertakes for another’s benefit, especially in the law of contract - the thing given or done by the promisee in exchange for the promise’.
It is necessary to demonstrate that the transfer of the dwelling house was made in exchange for a contractual undertaking by the claimant to allow the dependent relative to remain in occupation. This is a question of fact which may need to be demonstrated to the satisfaction of the Tribunal. Consequently in the absence of clear evidence that an agreement was entered into at the time of the transfer of the dwelling-house, and its terms, it will not be possible to demonstrate that relief is not due.

It may be suggested that this is not the sort of consideration which is intended by the legislation. Because the whole phrase is `rent free and without any other consideration’ it is inferred that the consideration to which the Act refers must be similar to rent and must be paid during the period of occupation and not at the beginning of it. This argument should not be accepted. The phrase `any other consideration’ is written in the widest possible terms and was clearly intended to be interpreted widely.