Landlord's Energy Saving Allowance
- Introduction
- Benefits
- What is covered?
- Who is eligible?
- A sample calculation
- How to claim the allowance
- Further Information
Introduction
Households produce over a quarter of total UK carbon emissions and, whilst existing measures have helped to reduce emissions in this area properties within the private rented sector are not on track to meet the emissions reduction targets that have been set. Such properties typically have low energy efficiency levels compared to the rest of the housing sector and consequently emit 500kg of carbon dioxide more per year. One reason for this may be that landlords are not sufficiently incentivised to improve the energy efficiency of their properties.
The Landlord's Energy Saving Allowance was introduced by the Government in April 2004 to encourage private landlords to improve the energy efficiency of their properties. Research consistently shows that privately rented properties are often the least well insulated and hence most in need of improvement. Furthermore the most vulnerable people often live in the private rented sector, thus making it even more important that these properties provide an adequate degree of thermal comfort.
The Landlord's Energy Saving Allowance allows private and corporate landlords who rent residential property to claim back up to £1500 per property for the installation of energy saving measures.
|Back to topBenefits
Landlords are often reluctant to spend money improving the energy efficiency of their properties as they perceive no return for themselves with all the benefits accruing to the tenants. There are in fact many benefits for landlords and the introduction of Home Information Packs and Energy Performance Certificates should further encourage the installation of these measures. It will soon be mandatory to provide prospective tenants with information on the energy performance of the property - tenants are far more likely to choose an energy efficient property!
The benefits of renting energy efficient properties include:
- It will soon be mandatory to provide an energy performance certificate to prospective tenants, so by taking action now you will be at an advantage when this happens and will not miss out on claiming the Energy Saving Allowance for this financial year
- You can insulate your properties, thus improving their energy efficiency and making them more attractive to tenants whilst saving money
- An energy efficient property is more attractive, desirable and valuable than one that is inefficient
- A well insulated property costs less to heat, which means that your tenants will be spending less on their fuel bills, making them more able to pay the rent
- Improving energy efficiency can result in reduced condensation, helping to protect the fabric of the building
- You will receive a tax rebate on the money you spend on energy efficiency measures
- Tenancies may well become longer and more secure
- Void periods, repairs and complaints may well decrease
- Tenants will enjoy warmer and more comfortable lives in your properties
- You will be helping Haringey Council to meet its targets with regard to reducing carbon emissions
- Your reputation as a landlord will be improved
What is covered?
When the Landlord's Energy Saving Allowance was introduced in April 2004 it covered only loft and cavity wall insulation. Its remit has been extended every year and currently covers the installation of the following measures:
Measure | Date Introduced |
|---|---|
| Loft Insulation | 2004 |
| Cavity Wall Insulation | 2004 |
| Solid Wall Insulation | 2005 |
| Draught Proofing | 2006 |
| Hot Water System Insulation | 2006 |
| Floor Insulation | 2007 |
Who is eligible?
Under section 312 of the Income Tax (Trading and Other Income) Act 2005, landlords who pay income tax may claim the Landlord's Energy Saving Allowance on the expenditure they incur in installing loft or cavity wall insulation in a dwelling house which they let when computing their taxable profits.
Legislation contained in the Finance Bill 2007 extended the lifetime of the allowance from 2009 until 2015 and also enabled corporate landlords who let properties for residential purposes to claim. Furthermore from April 2007 the allowance is to be applied per property rather than per building; so for a house converted into three flats an allowance of £4500 can be claimed.
The Landlord's Energy Saving Allowance does not cover holiday lets or resident landlords at the present time.
|Back to topA Sample Calculation
The example below shows the potential savings for one property where the maximum amount (£1500) has been spent on the installation of insulation. If the same work is carried out in multiple properties the tax saving is multiplied by the number of properties.
A landlord with multiple properties could therefore save a significant amount!
| Cost of Insulation: | £1500 |
|---|---|
| Annual Taxable Income: | £20,000 |
| Income - Allowance: | £18,500 |
| Total Taxable Profit: | £18,500 |
Saving at 22% income tax: £330
Saving at 40% income tax £600
|Back to topHow to Claim
The process for claiming the Landlord's Energy Saving Allowance is very simple. There is no need, in fact, to actually make a 'claim'. Once you have installed the measures in each property you need simply to complete box 5.36C of the Land and Property section of your income tax return. The amount that you have spent on the installation of energy efficiency measures up to a maximum of £1500 per property will be offset against your tax
Further Information
For further information or specific tax enquiries please contact your local tax office or HM Revenue and Customs.
A link is provided to the website of HM Revenue and Customs in the external links section at the bottom of the page.
The Energy Saving Trust provides a great deal of excellent information on energy efficiency and can be contacted on 0800 512 012, alternatively follow the link to their website provided in the external links section at the bottom of the page.
|Back to topUseful External Links
The following links are not part of the Haringey Council website. Please read our legal disclaimer before using these links
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