Tax Tip 29: How to claim a £1,500 tax allowance if you are a landlord

If you are a landlord and make energy saving improvements to your property, you could reduce the tax you pay. You can do this by claiming the ‘Landlord’s Energy Saving Allowance’ (LESA).

Who can claim LESA?
You can claim LESA if you are a landlord renting out residential property and are either:
– an individual landlord – someone who pays income tax on profits from letting
– a corporate landlord – someone whose rental business is registered as a company and you pay corporation tax on profits from letting

However, you can’t claim if you are a landlord:
– claiming an allowance under the ‘Rent a Room’ scheme
– of a property rented out as furnished holiday accommodation

LESA – how much is it and what does it cover?
LESA is a tax allowance (not a cash payment) that allows you to claim up to £1,500 against tax every year. This allowance can be claimed for properties you rent out in the UK and abroad. You can claim LESA for the costs of buying and installing certain energy saving products for properties you rent out, but only for what you actually spend.

You can claim LESA for what you have spent on:
– cavity wall and loft insulation, after 6 April 2004
– solid wall insulation, after 7 April 2005
– draught proofing and hot water system insulation, after 6 April 2006
– floor insulation, after 6 April 2007

You can claim LESA up to 1 April 2015, when the availability of this allowance will end.

If you are an individual landlord, you claim the allowance when you fill in your self assessment tax return. You’ll need to fill in the costs of buying and installing the energy saving products in the ‘Landlord’s Energy Savings Allowance’ box on: 
– the UK property pages – if your property is in the UK
– the foreign pages under the section ‘Income from land and property abroad’ – if your property is outside the UK

The amount you enter on the form is claimed against your taxable profits from renting out your property. This means when you fill in your tax return you deduct the amount you are claiming for this allowance from your income. This reduces the amount of tax you pay for the year.

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