Nichola Ross Martin's Tax Consultancy

The Landlord’s Energy Saving Allowance (LESA) is a unique allowance given to the owners of dwelling houses who use their properties for ordinary property letting.

• The allowance is limited to £1,500 per dwelling house and given on the cost of acquiring and installing certain energy-saving items.
• The allowance is only available on qualifying expenditure on incurred between 6 April 2004 and 5 April 2015.

Qualifying expenditure

The type of expenditure which qualifies for the allowance and allowance given has changed since inception:

From 6 April:	£1,500 allowance given	Energy saving expenditure
2004	Per building	Loft and cavity wall insulation
2005	Per building	Draught proofing
2006	Per building	Hot water system insulation
2007	Per dwelling house	Floor insulation

 

From 2007, where a single building contains two or more dwellings, the landlord can claim the allowance on each dwelling. In the case of a block of flats or student accommodation the allowance could be substantial.

Corporation Tax

LESA can be claimed on the energy-saving items listed above, provided the expenditure was incurred on or after 8 July 2008 and before 1 April 2015.The maximum allowance is £1,500 per dwelling house.

Apportionment

Expenditure will be apportioned on a just and reasonable basis where:

• A building has mixed use
• A building containing more than one dwelling house
• A property is let more than one landlord

Restrictions

A landlord cannot claim the allowance:

• If he claims rent-a-room relief, see property profits. 
• If the business is furnished holiday letting and the dwelling house consists of some or all of that accommodation during the year
• During the course of construction.
• If the dwelling house is comprised in land in which he does not have an interest

Why can't the landlord claim capital allowances instead?

S35 CAA 2001 provides that expenditure incurred on plant and machinery for use in a dwelling house, does not qualify for capital allowances if the qualifying activity consists of:

• An ordinary property business
• An overseas property business or
• Special leasing of plant and machinery

The LESA is designed to encourage landlords to introduce energy saving measures.

Small print

S312 and s313 ITTOIA 2005, as modified by SI 2007/3278