Granny Flat Tax Risk

UK home owners whose property includes a self-contained annexe could soon face an extra council tax bill. ‘Granny flats’ could soon end up being banded for the tax in their own right.


According to The Times, there are plans to revalue every property in the country, but this is not likely to happen until after the next election. In the meantime, local councils are “diligently” banding self-contained accommodation in order to raise revenue.

Planning departments and council building regulation surveyors should report any new buildings to the Valuation Office Agency (VOA), which defines a self-contained unit as “a building, or part of a building, which has been constructed or adapted for use as separate living accommodation”. The unit, which may be rented out to paying guests on a self-catering basis, does not need to have a private entrance, or be used on a daily basis by the occupants of the main property. It can share electricity, water and gas supplies with the main residence.

A typical condition of planning consent when constructing such annexes is that it cannot be sold separately, which, the paper explains, means it has no independent value. Nevertheless, this is not taken into account for council tax purposes and the accommodation will be banded by the VOA.

Exemptions to council tax do exist, but it is believed that only one is likely to apply to home owners with granny flats – if the annexe is occupied wholly by dependent relatives aged over 65. These can be both blood relatives and those by marriage.

Should your self-contained unit be banded for council tax, it is not easy to get it delisted. The VOA says that removing facilities, such as cookers or showers, or superficially changing the use of rooms will not affect its decision.

The agency stipulates that “any alterations must be significant, extensive and change the character of the room completely, so that it can no longer be used in its original form without substantial works of reinstatement”. For enquiries on the matter, the VOA helpline is 0845 6021507.

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