If you are a landlord and make energy saving improvements to your property, you could reduce the tax you pay. You can do this by claiming the ‘Landlord’s Energy Saving Allowance’ (LESA). CPS Homes are bringing this to your attention as the additional HMO licensing in Cathays places more emphasis on energy efficiency and security than before, which may result in landlords needing to carry out remedial works.
The Landlord’s Energy Saving Allowance (LESA) was introduced to encourage landlords to improve the energy efficiency of let residential properties. It is an allowance for the cost of acquiring and installing certain energy-saving items. Expenditure on these items cannot normally be deducted when calculating taxable profits and is not eligible for capital allowances under CAA 2001.
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.
If you are an individual landlord, you claim the allowance when you fill in your self assessment tax return. 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.