As winter approaches many landlords could reduce the amount of income tax they are paying by benefitting from a little known tax allowance.
Up to £1500 a financial year could be claimed under the Landlords Energy Saving Allowance (LESA) if landlords buy and install certain energy saving products to the properties they rent out. As explained in the Landlord Buy-to Let magazine by Marc Bloomfield of The National EPC Company “it seems the message hasn’t quite got out there”
“It can be claimed for both rented buy –to -let and commercial property and can be claimed on properties rented out abroad”
According to Rachel Murphy of North West Accountancy firm Hurst, the process is relatively straight forward and is carried out when you fill in your tax return. “Costs are claimed against your taxable profits from renting out the property. When you fill in your tax return you deduct the amount claimed for this allowance from your income, meaning you pay less tax”
Corporate rental businesses who pay corporation tax on profits from letting and individual landlords who pay income tax on profits from letting can apply. It’s fair to say insulation is not top of most landlords “to do” list but simply by carrying out draught proofing, loft insulation and hot water insulation landlords can benefit from this tax allowance.
It is important to consider the long term benefits of good insulation to the general upkeep and maintenance of the property. Good insulation can alleviate damp and condensation problems, reduce unnecessary maintenance costs and make a property more desirable to tenants. Furthermore, tenants are becoming increasingly more aware of energy efficiency and saving money in the current economic climate.
Landlords considering taking advantage of LESA should be aware that the work needs to be carried out by the end of March in order to claim in the next tax year.
Ask your accountant of visit http://www.hmrc.gov.uk/manuals/pimmanual/PIM2072.htm.