Income Tax (Trading and Other Income) Act 2005 section 312

Deduction for expenditure on energy-saving items

Section 312 provides a tax deduction for landlords who spend money on certain energy-saving items installed in let residential properties, where that expenditure would normally be disallowed as capital expenditure.

• Landlords operating a property business that includes a dwelling-house could deduct the cost of acquiring and installing qualifying energy-saving items, provided the expenditure was incurred before 6 April 2015
• The relief applied where the expenditure met the "wholly and exclusively" test for the property business but would otherwise have been blocked by the rule against deducting capital expenditure, and no capital allowances claim was available
• Qualifying energy-saving items include cavity wall insulation, loft insulation, and any other energy-saving items specified by Treasury regulations, which may also set conditions an item must meet to qualify
• Where only part of a total amount of expenditure qualified for the relief, a deduction was allowed for the qualifying portion based on a just and reasonable apportionment

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