There have been some changes in council tax regulations regarding annexes in 2014. Through this blog post, we will discuss whether houses with self-contained annexes are required to pay a higher council tax bill or not. Additionally, we will also elaborate on the calculation of council tax rates, as well as situations in which properties receive a council tax discount or maybe completely exempted from it. 

Do Houses With A Self Contained Annexe Pay More Council Tax?

While the addition of a self-contained annexe increases the market value of your property by 20-30 per cent and is assessed separately for your main property for valuation you do not pay additional or incremental council tax. In fact, if you have an annexe or a granny flat on your property, you will be able to get an exemption on council tax under the following conditions:

  • a dependant relative (aged 65 years and above or physically/mentally disabled) living in the annexe
  • it is occupied by students or individuals under 18 years of age
  • it is an unoccupied annexe that cannot be let out on its own

You can avail of a 50 per cent discount on your council tax bill for an annexe under the following conditions:

  • the annexe is part of a single property and includes at least one other property
  • the annexe is being used as part of the main residence by the person who is liable to pay council tax
  • a family member occupies the annexe

There are eight bands that run across A to H, with Band A assigned to properties with the lowest value and increasing up to Band H for properties with higher values. It is on the basis of this assigned band, that the amount of council tax is decided. Therefore, the higher the valuation band, the higher the council tax payments.

In addition to a property’s value, the Valuation Office Agency considers the following factors when assessing a property for valuation purposes:

  • location
  • size
  • character
  • layout
  • purpose or use

Will An Extension Change Council Tax?

An extension to your home can increase its market value by up to 23 per cent and consequently impact your council tax as the valuation band increases; however, as per law, these changes only come into effect once you sell the property.

If the nature of the extension is a simple kitchen or bathroom extension or a glass structure attached to the main house, it may not have a significant impact on the market value of your property. Hence, there is a strong likelihood that certain home improvements may not change the council band that is assigned to your property. In such cases, there may be no change to council tax bills (on the basis of reassignment of council tax bands) when the property is sold. 

An elaborate extension such as a single or double-storey structure that may have cost you anywhere in the range of £ 40,000 to £ 50,000 will have a significant impact on the market value of your property. This may require revaluation and reassignment to your council tax bands; thus increasing the council tax payments when the property is sold.

Will Garage Conversion Increase Council Tax?

No, having a garage conversion will not increase your council tax bill; at least not until you sell your property.

Being a property value-based taxation system, council tax is influenced by changes in the value of your property. There are eight valuation bands based upon property values that run from A to H in ascending order. Properties valued up to and equal to £ 40,000 are categorised as Band A; with the maximum value of higher than £ 320,000 categorising them in Band H. 

In some cases, the property value band does not change despite an increase in the value of your house. Since a garage conversion can increase the value of your property up to 20 per cent, there may be cases where the valuation bands elevate, costing the new owners/tenants a higher council tax bill.

Does A Conservatory Affect Council Tax?

No, the law clearly states that additions/modifications or extensions to property including having a conservatory will not affect council tax for the property until it is sold. 

This means that as long as the owners who have made such alterations to the property’s structure continue living in the property, there will be no revaluation done with the intention of increasing council tax on the premises. 

However, if there is an annexe or a self-contained unit added to the property, there will be a revaluation of the premises and a possible revision of the previously assigned council tax.

Are Occupied Properties Eligible For Council Tax Exemption?

An occupied property may be exempted from council tax payments under the following conditions:

  • the visiting accommodation of a member of the armed forces
  • the Ministry of Defence barracks
  • part of another property; residents of whom are elderly or disabled relatives of those living in the said premises
  • student hall of residence 
  • the residents are foreign diplomats

How Do I Calculate Council Tax?

To be able to calculate one’s council tax, it is essential to collect information to answer the following questions:

  • Which value band does my property belong to?
  • What are the council tax rates that my local council has set for this band?
  • Am I eligible for a discount or complete exemption on the council tax bill?

It must be noted here that the property must be in England, Scotland or Wales.

What Are The Factors That May Affect My Council Tax Bill?

There are certain circumstances due to which properties may be revalued and their bands reassigned by the local council. Below is a list of factors that may cause a change in band:

  • a part of your property is demolished and is not rebuilt
  • the property is altered to subdivide it into self-contained units, (this could be a single unit with an annexe – each unit will be considered under a separate band) 
  • a single property is reconstructed into self-contained flats
  • flats are converted to a single property
  • residents start or stop working from home
  • changes were made to property the property by the previous owner
  • significant changes such as a new road are being made to the local area
  • the council tax band was changed for a property with similar features in the same area

How Can I Avail Council Tax Reduction?

Whether residents own or rent their homes, they may qualify for a council tax reduction in their bill, if they meet any of the following criteria:

  • living alone: regardless of financial circumstances, living alone is enough reason to avail of a 25 per cent discount as council tax rates are established on the assumption that each house will comprise of two adults.
  • living with a full-time student: full-time students and student nurses are exempt from council tax bills. Sharing a residence with them qualifies you for a discount.
  • living with someone below 18 years of age: since council taxes are applicable on adults, anyone below the age of 18 does not qualify to be counted as a member of the shared household where council tax is levied.
  • being a carer: while there are additional criteria to be considered her, being a carer for another member of the household for at least 35 hours per week qualifies the individual for a CTR. 
  • changes in home value: if there is a change in the surroundings of your residential property causing a full-time decrease in its value, the council tax band may be lowered by a valuation expert, enabling you to enter a lower band with reduced council tax bills due.
  • the desired mode of payment: while council tax payments are spread over 10 monthly instalments, should you require a change such as 12-month instalments, it will reduce the monthly amount to be paid. On the other hand, should you prefer to pay the annual amount in a lump sum, a bulk payment may also qualify you for a discount.

How Can I Get Exemption From Council Tax?

To be able to claim eligibility for exemption council tax payments, claimants must be able to fulfil the following criteria:

  • the owner does not live in the said property and lives in a care home
  • the owner is receiving hospital care at a medical facility
  • the owner/tenant is temporarily living elsewhere to take care of someone
  • the owner/tenant is in the armed forces and is stationed away from the premises at times
  • the owner/tenant is serving jail time in prison (not for non-payment of council tax bills)
  • the said property is/was registered by a charity and is not used for residential purposes
  • the said property is an extension/annexe of a single property
  • properties that have been repossessed
  • properties that are purchased to be demolished

If an individual fulfils any of these criteria, they must contact their local council office and raise an appeal for council tax exemption.

Conclusion:

Through this detailed discussion, we can conclude that a self-contained annexe is usually exempted from council tax payments especially when it is occupied by an elderly relative who is above 65 years of age or younger residents below 18 years of age. If an annexe is occupied by family members, you may be able to get a discount on your council tax bill for it. However, homeowners should be mindful that their home and the adjacent annexe will be assessed for valuation and council tax separately. 

FAQs: Do Houses With A Self Contained Annexe Pay More Council Tax?

Does an annexe add value to a house?

Yes, an annexe adds value to one’s property. According to some estimates, an annexe can add between 20 to 30 per cent to the market value of your house.

What is a self-contained annexe?

A self-contained annexe is a small piece of construction in your house garden with its own living area, bathroom and kitchen.

Can an annexe have a separate address?

No, an annexe cannot have a separate address as it is part of the family property that it is built within.

Can I use my annexe as a holiday let?

If you plan to use your annexe a holiday let, you will need to take approval from Planning Permission as this involves a change of use of the property.

Can you convert a garage into an annexe?

An attached garage can be changed into an annexe under guidelines for Permitted Development. However, in the case of converting a detached garage into an annexe, you will need approval from Planning Permission. 

References:

Annexes and Council Tax

Got an annexe? Check if you’re due a council tax discount

Granny Annexe Council Tax

Do annexes pay council tax?

Properties exempt from council tax – Council tax discounts, reductions and exemptions – Newham Council

Discounts and exemptions (sheffield.gov.uk)

How Much Does A House Extension Cost In 2021? Your UK Guide

Adding a garage to increase value

Will a conservatory increase council tax? | Conservatories costs

Council Tax: what it is, what it costs and how to save money

Council tax: Why do some areas pay more and how can you reduce your bill? | This is Money

Council Tax – Home 

Check if you can pay less council tax

Council Tax and annexes

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John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.