Private landlords considering taking advantage of the Affordable Warmth Scheme to install insulation or a new ‘A’ rated central heating boiler in their properties (subject to the tenant qualifying), are reminded of the Landlord’s Energy Saving Allowance.
The Landlord’s Energy Saving Allowance (LESA) for non-corporate landlords was introduced by the Government in 2004 to encourage landlords to improve the energy efficiency of their residential properties. It creates a tax-allowable expense for the cost of acquiring and installing certain energy-saving products. Expenditure on these items would not otherwise be deducted when calculating taxable profits and is not eligible for capital allowances under CAA 2001.
Landlord’s Energy Saving Allowance can be claimed in qualifying residential properties provided the expenditure is incurred before April 2015. This date aligns with the proposed end-date for applications under the Affordable Warmth Scheme, part of the Energy Companies Obligation which runs alongside the Green Deal.
Prior to 5 April 2007 the allowance was £1,500 per building but this was enhanced to cover a ‘dwelling house’ rather than a ‘building’. This means that where a single building contains more than one dwelling – for example when it is divided up into apartments – the maximum allowance is £1,500 per dwelling.
LESA can be claimed on the following energy-saving items provided the expenditure was incurred after the date applicable to each:
Loft insulation After 5 April 2004
Cavity wall insulation After 5 April 2004
Solid wall insulation After 6 April 2005
Draught proofing After 5 April 2006
Hot water system insulation After 5 April 2006
Floor insulation After 5 April 2007
LESA can also be claimed by corporate landlords but different rules apply. Since there are conditions and restrictions attached to both corporate and non-corporate allowances, readers are advised to consult their advisors.