A generous tax break which could save landlords a small fortune every year is being overlooked by many as a way to cut their tax bill.
The Landlord’s Energy Saving Allowance was created to help landlords offset the costs of materials and installation for energy-saving measures on their rental properties. The aim was to encourage landlords in the private sector to improve energy efficiency for their properties which are generally less efficient than other houses. A landlord can claim up to £1,500 for every property regardless of whether it’s a house, bedsit or flat. The size of the property is also immaterial.
Landlord’s Energy Saving Allowance is an incentive
Essentially, anything that improves a property’s energy efficiency can be claimed for including cavity wall and loft insulation, hot water tank insulation as well as the draught proofing of doors and windows.
However, should a landlord undertake the work themselves, then they can only claim for the cost of materials. For those landlords who run their property portfolio as a limited company, they can put the cost of materials and installation on their company tax return under ‘allowable business expenses’.
Individuals who rent out properties without having a limited company can make the same claim for the expenses on their self-assessment tax return.
How to claim Landlord’s Energy Saving Allowance
One of the big attractions for a landlord is not just for the opportunity of saving money on their tax bill, but it’s also an opportunity to help save their tenant cash too. Any work undertaken to help insulate the property will lead to a happier tenancy since heating bills will be reduced and a tenant is more likely to stay for longer in the property.
A well-insulated property will also be easier to let and with an Energy Performance Certificate, a landlord will be able to demonstrate that the property has high energy efficiency.
In addition, warm homes are generally less likely to suffer with mould and damp problems which means lower maintenance costs. It should also be noted that landlords cannot claim against their tax bill if their business includes the letting commercially of furnished holiday homes or if they claim under the rent-a-room scheme.
For more information about Landlord’s Energy Saving Allowance then visit the HMRC’s website for a guide on what can and cannot be claimed under the scheme.