REV BN 31: Landlord's Energy Saving Allowance

Who is likely to be affected?

1. Individual landlords (and other landlords who pay income tax) who let residential property.

General description of the measure

2. The measure gives an allowance for capital expenditure on loft and cavity wall insulation in rented accommodation.

Operative date

3. From 6 April 2004.

Current law and proposed revisions

4. Income tax law does not generally permit a deduction against revenue for expenditure on new capital assets in computing the taxable profits of a property business. Expenditure on repairs, renewals or replacements is allowed in the normal way in computing profits. Capital allowances can also be claimed for capital expenditure on plant and machinery installed in property other than a dwelling house.

5. The changes will allow landlords a deduction for income tax purposes up to a maximum of £1,500 when they install loft or cavity wall insulation in a dwelling house which they let. There will also be a power for the Treasury to amend or extend the definition of allowable expenditure for this purpose by statutory instrument.

Further advice

6. If you have any questions about this change, please contact your local Inland Revenue tax office.

www.inlandrevenue.gov.uk