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articles > Energy-efficient Landlords Save on Tax!

Article > Energy-efficient Landlords Save on Tax!


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With tenants now being given an EPC when they rent a new home, landlords need to start considering the energy efficiency of their rental property. Though it’s probably not yet at the top of a tenant’s shopping list, faced with two equally nice properties, energy efficiency can clinch you the deal. Heating your home isn’t getting cheaper, more and more people are concerned with their carbon footprint, so let’s face it: if you’re renting in an area where people can afford to have those sorts of concerns, you as a business person need to share them.

Fortunately, the government offers you a small incentive to improve the energy efficiency of rental property too. No one’s going to get rich claiming the Landlord’s Energy Saving Allowance (LESA), it is a useful tax allowance available to landlords who are undertaking property improvements. That’s right: it’s a little tax break for landlords who have taken steps to improve the energy efficiency of property they’re letting. Think lagging, insulation and draught-proofing.


The allowance is worth up to £1,500 and you can claim if you’ve spent money on cavity or solid wall insulation, insulating the floor or hot water system, lagging the roof or draught proofing the property. LESA is a tax allowance (not a cash payment) that allows you to claim up to £1,500 against tax every year. This allowance can be claimed for properties you rent out in the UK and abroad. You can claim LESA for the costs of buying and installing certain energy saving products for properties you rent out, but only for what you actually spend.

You can claim LESA for what you have spent on:

•cavity wall and loft insulation, after 6 April 2004
•solid wall insulation, after 7 April 2005
•draught proofing and hot water system insulation, after 6 April 2006
•floor insulation, after 6 April 2007

You can claim LESA up to 1 April 2015, when the availability of this allowance will end




You’re eligible if you’re an individual landlord paying income tax on earnings from a let. You can also claim as a landlord with a registered company paying corporation tax on lettings profits. Unfortunately, you won’t benefit if you’re operating as part of the “Rent a Room” scheme or renting a holiday home.

If you are an individual landlord, you claim the allowance when you fill in your self assessment tax return so you’ll probably want to have a chat with your accountant if you’re thinking about using it. You’ll need to fill in the costs of buying and installing the energy saving products in the ‘Landlord’s Energy Savings Allowance’ box on:

•the UK property pages - if your property is in the UK
•the foreign pages under the section ‘Income from land and property abroad’ - if your property is outside the UK

The amount you enter on the form is claimed against your taxable profits from renting out your property. This means when you fill in your tax return you deduct the amount you are claiming for this allowance from your income. This reduces the amount of tax you pay for the year.

But get on with LESA; the allowance expires on 1 April 2015

If Britain is serious about moving towards a low-carbon economy (as the government keeps saying we must be) then incentives like this are useful. They need to do more: raise the limit, because £1500 doesn’t go that far. Many more landlords might be interested if they could claim a bigger chunk off tax for real efforts on improving energy efficiency. Just think of the carbon emissions we’d all save even if we only did the minimum!

Choose an energy efficient boiler
More than 80 per cent of home energy use is for heating and hot water - so getting a more energy efficient boiler can make a big difference. Look out for the Energy Saving Trust Recommended label when you're choosing a new boiler. This label can only be used on the most energy efficient products, usually the top 20 per cent of those available.

Insulate your walls and loft
Is your loft insulation 270 millimetres thick? More than half the heat lost in a typical home escapes through the walls or the roof. Installing loft and cavity wall insulation will reduce the heat escaping. Combined with a degree of draught exclusion, it could also cut fuel bills by up to £180 every year.

Cavity wall insulation - Installing cavity wall insulation can take just a couple of hours for a typical three-bedroom house, and can be done from the outside. Your building needs to have cavity walls. You can insulate solid walls too, but this is a bigger and more costly job to do.

Loft insulation - Loft insulation is easy to install - you can even do it yourself. If you already have loft insulation, check how thick it is. Adding another layer to bring it up to the recommended 270 millimetres will save both energy and money being wasted


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