HMRC internal manual

Employment Income Manual

Removal or transfer costs: expenses and benefits to which section 271 ITEPA 2003 applies: disposal of old residence

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Section 279 ITEPA 2003

Disposal covers both the sale of a property and the giving up of a tenancy or other interest in a property. The meaning of other interest in this context is quite wide. It can cover the situation where the employee lives in a house owned wholly by a spouse or partner but where the employee has contributed over the years to the mortgage, repairs and other household costs, so that an equitable interest in the property has been built up. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The property must be owned by, or the tenancy or other interest held by:

  • the employee, or
  • the employee and one or more members of his or her family or household (see EIM20504), or
  • one or more members of the employee’s family or household.

Disposal also includes intended disposal. If a sale falls through the expenses will still be exempt provided that the employee does eventually succeed in selling or changes his or her residence in some other way, for example, by moving into permanent rented accommodation.

The specific expenses and benefits covered are:

  • legal expenses and services connected with the disposal
  • legal expenses and services connected with the redemption of a loan relating to the property - a loan relates to a property if it was raised to acquire the property, for example a mortgage, or if it was secured on the property, for example a home improvement loan
  • penalties for redeeming a loan relating to the property
  • estate agent’s or auctioneer’s fees or services
  • advertising
  • disconnection of electricity, gas, water or telephone
  • if the property is left empty awaiting disposal:

    • any rent paid for the period when the property is empty
    • insurance for the period
    • maintenance of the property during the period
    • preserving the security of the property during the period.

The council tax for the empty period is not allowable.