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Posted Sat, 13 Nov 2021 17:42:19 GMT by MHanners
Single to Double Glazing was deemed an improvement and not offsetable as an expense against taxable income from circa 1998. Some case caused a change in policy and HMRC allow a change from Single to Double to be an expense. That is good for COP26 objectives noting Double-Glazing itself typically has a life of about 20-35years. The occasional "environmentally responsible" landlord may have or have had solar panelling installed and that is deemed a capital improvement of the property. Can any capital depreciation be applied as the solar panels probably won't last 50 years or will their replacement at some point be deemed an expense in that case? A Storage Battery for a solar installation will last for a substantially shorter period than double glazing. Is a Storage Battery therefore treatable as an expense? If not, should it be? Apply the DGg rationale and considering COP26, HMRC should provide incentives to our landlords; noting the EPC level C criteria may be imposed. What grates and makes things even less viable is that the Battery is subjected to 20% VAT. What part does the government and HMRC have to play in COP 26? Thumbs up on Single to Double Glazing to what about other things like loft, cavity wall insulations and energy generation/storage items? All landlords end up having to do is charge tenants more which HMRC takes yet more tax from. Is it any wonder so much of our residential housing stock is EPC level D->G? A serious change of mentality is required IMHO but I'd appreciate an answer on the Storage Battery as an expense.
Posted Thu, 18 Nov 2021 12:13:54 GMT by HMRC Admin 29
Hi,

Installing a solar battery as part of a solar installation is a capital expense. Capital expenses are not allowable and cannot be claimed against rental income.

In terms of capital allowances, expenditure incurred on the provision of plant or machinery for use in a dwelling-house is not qualifying expenditure for an ordinary property business.

The plant or machinery does not necessarily have to be located in the dwelling-house in order to be for use in it. For example, if a landlord installs ground mounted solar panels within the garden of a house he lets and the electricity generated will be used in that house, the expenditure will not qualify for capital allowances.

The Landlord’s Energy Saving Allowance was withdrawn from April 2015.

Please see the guidance at:

Work out your rental income when you let property

CA23060 - Plant and Machinery Allowances (PMA): qualifying expenditure: plant and machinery in dwelling house

Thank you. 
Posted Thu, 18 Nov 2021 12:47:30 GMT by MHanners
Thankyou for the answers which don't surprise me in the slightest. Given the government's huffing and puffing at COP26, perhaps HMRC would like to advise how they believe the answers above are conducive to incentivising Landlords to upgrade property "above and beyond" the minimum EPC. It is bad enough stinging responsible people for 20% VAT on having a midlife upgrade to their Solar Panelling system to include a battery. Would a landlord get support if they upgraded their central heating system to Air or Ground Source Heating or is that all deemed a Capital improvement too? Should I write to the relevant ministers and my MP? It certainly seems something to campaign on. Thankyou
Posted Mon, 22 Nov 2021 09:54:46 GMT by HMRC Admin 17

Hi,
 
Thank you for your question.

You will appreciate that I cannot comment on your remarks relating to the Income Tax legislation as while HMRC is responsible for administering
the legislation we are not responsible for the legislation itself.

I would, however, mention that while capital expenditure of the type described in your original question can’t be claimed as an expense against your letting income it is taken into account in calculating any capital gain or less arising when you eventually dispose of the property.

Thank you.

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