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Regulations have been laid before Parliament, which provide that hot water system insulation, draught proofing, solid wall insulation and floor insulation may be classed as energy-saving items, and therefore may be deducted by landlords for income tax purposes.

 These regulations, details of which were originally announced in the 2006 Pre-Budget Report, will affect individual landlords who let residential properties and pay income tax, and corporate landlords who let residential properties and pay corporation tax.

ITTOIA 2005, s. 312 allows landlords paying income tax, when calculating the taxable profits of a property business, to deduct expenditure on acquiring and installing these items in the residential properties they let. Currently a deduction is provided for all of these items except floor insulation.

The Energy-Saving Items Regulations 2007 (SI 2007/831) extend the energy-saving items for which a deduction can be made and ensure all items added since 2004 are listed in one set of Regulations. The Regulations also set the maximum amount of expenditure for which a deduction may be made to £1,500 per property (dwelling-house) per tax year. This maximum was previously set at £1,500 per building per tax year.

The Regulations further introduce the conditions for the allowance, provide for the apportionment of the allowable deduction when two or more people own or have interests in the property in question, and make provision for appeals regarding these apportionments.

Links

Explanatory Memorandum to SI 2007/831

2006 Pre-Budget Report: Extension to landlord's energy saving allowance