UK Tax Relief

[Andy W]

Good Afternoon.
I am a tenant in a property owned by my father in law. We are making some improvements to the property which we are paying for. Some of the work is essential like replacing drains, heating system, windows etc. I am aware that relief is not given on improvements etc and only essential maintenance but we are trying to work out how to (if we can) pay the father in law the cost of the maintenance/repairs in order that he can claim relief. I wonder whether a simple loan from me would suffice? His accountant has highlighted a payment for replacement windows stating that it cannot be put through as a business expense as the money has come from me. Is there a legitimate way of providing the money in order for him to claim relief? This is purely a matter of we have the money for the work whilst my father in law does not.
All the issues regarding 'our' money / someone else's property has been addressed and sorted.
Thanks in advance
Andrew

 

[Fidget]

There's nothing stopping you from lending money to your FIL and him then spending it on a property owned by him, that you live in. Subsequent expenditure on the property by the FIL might qualify as a tax reducer, but he'll still have loan repayments made to you.

What benefit is it that you're trying to get out of this arrangement?

 

[Andy W]

Thank you Fidget for your response. The loan is only repayable on either sale of property, for some reason having to leave the property or from his estate (hopefully a long way away). It's purely as we have the available funds and he does not. I think his accountant has pulled him up on the fact that we paid him an amount for some work which matched the cost of the work, less the VAT. He's VAT registered as a farmer with the property being part of the business as opposed to a stand alone BTL property. Not sure if that makes a difference.
If a loan should not cause as problem, would i be better just loaning the entire amount straight away instead of altering the simple loan agreement at each stage of the work? The property is a very old house which needs a lot of work doing to it. Elements we will not be able to claim relief but surely his accountant should be able to highlight the relevant work from the absolute no no's?

 

[Fidget]

This has suddenly become complicated. If it was a loan with commercial substance to it, then it would be like any other. But if it's only repayable if any of the circumstances you mention comes to pass, then there's a lack of commercial substance to it and I'm not sure how HMRC will see it in the individual status for tax purposes.

That's probably not much help to you, but the bigger picture of it will be for HMRC to give you guidance on. You can use their contact link to drop your scenario in without giving all your personal details and see what they say about it.

 

[Andy W]

Once again, thanks for the advice. I probably should have included that info in the OP sorry. I did wonder whether I should just approach HMRC to see what they say. I can't believe that this would be the first time for this situation. I will contact them and post there response in case it will be of value to anyone else in a similar situation.