The drive to net zero isn’t just environmental, it’s now central to how commercial property retains value. As an investor or property owner, green retrofit offers more than compliance: it’s a way to boost tenant appeal, reduce operating costs, and access tax reliefs you may never have considered.

Why EPC Targets Matter More Than Ever

Since April 2023, any new or renewed commercial leases in England and Wales must meet a minimum EPC rating of E. Looking ahead, the government has proposed elevating this to a minimum C by 2027 and B by 2030. 

Properties with poor EPC ratings face increasing risk:

• Difficulty in letting space

• Discounted valuations

• Higher operational overheads

In other words, an inefficient building isn’t just a cost, it could be a liability.

Retrofit = Opportunity, Not Cost

Far from being a drag on your capital, retrofit work can unlock hidden value:

• Tenant demand: Many occupiers now prefer greener buildings as part of their ESG agenda.

• Access to capital: Lenders scrutinise EPC performance; better ratings may help with borrowing terms.

So retrofit isn’t simply about compliance, it’s about positioning your asset for future growth and sustainability.

Capital Allowances & Tax Relief: The Hidden Upside

One of the biggest missed opportunities in retrofit is not recognising which works qualify for capital allowances, commonly referred to in more general terms as tax saving allowances.

Qualifying elements might include:

• Heating, ventilation & air conditioning (HVAC) systems

• Lighting upgrades and wiring

• Insulation or thermal systems added to walls/roofs

• Renewable energy systems, where permitted

These upgrades may allow you to claim reliefs like Annual Investment Allowance (AIA) or Writing Down Allowances (WDA) depending on your expenditure and accounting structure.

Even though the Enhanced Capital Allowance (ECA) regime was removed in 2020, many retrofit costs still fall within mainstream allowances.

If a £1 million retrofit contains £600,000 of qualifying expenditure, you could potentially reduce taxable profits significantly (in a 19–25% tax regime, that’s a six-figure saving).

Your Action Plan

1. Run an EPC audit – Identify weak areas and focus on upgrades that will push you toward the 2027/2030 thresholds.

2. Engage a capital allowances specialist early – Get all expenditure broken down into what qualifies for relief, don’t wait until post-completion. We can assist with this.

3. Time your works strategically – Align your retrofits with your company year-end to maximise tax reliefs.

4. Model financial impact – Compare net cost vs savings, factoring in tax benefit and uplift in rent/value.

Speak To Our Experts 

Owning efficient real estate isn’t just about compliance or ethics, it’s sound investment strategy. By combining green retrofit with smart use of tax reliefs, you can protect your bottom line and future proof your portfolio.

At CPA Tax, we help investors uncover latent tax savings tied to retrofit and capital works. Let’s talk about how your next upgrade can work harder.

📩 Contact us today to see what’s possible.