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New energy regulations save landlords money
06 December 2007
The Energy-Saving Items (Income Tax) Regulations 2007 come into force today, allowing landlords of residential properties to balance the cost of energy-saving items against their taxable profits for calculating income tax.
The regulations allow for the acquisition and installation of hot water system insulation, draught proofing, solid wall insulation and floor insulation to be classed as items of an energy saving nature for the purposes of section 312 of the Income Tax (Trading and Other Income) Act 2005.
The targets set by the government on carbon emissions are not being met by the private rented sector. Such properties have low energy efficiency levels compared to the rest of the housing sector, and typically produce around 500 kg of carbon dioxide per year more than other houses. It is hoped that this financial incentive to landlords will mean more energy efficient rental properties, and it will help tenants too, who should see a reduction in their energy bills.
For landlords, however, there is a cap on the amount of expenditure that can be claimed against income tax: £1,500 per year for expenditure incurred after 5 April 2007, and this maximum is now for each dwelling thus allowing for a landlord to take full advantage of the relief within a block of flats.
