The short answer
Usually the annexe is given its own band, but in England a relative living there gets 50% off, and the annexe is exempt if that relative is 65 or over or disabled. An annexe used as part of the main home also gets the 50% discount.
Council tax is one of the running costs families forget to put in the plan. The rules below are for England. Wales and Scotland have their own, and your council is the body that applies them.
Does an annexe get its own band?
Usually, yes. The Valuation Office Agency looks at whether the annexe could be lived in as a home on its own: its own entrance, kitchen, bathroom and somewhere to sleep. If it could, it is normally banded separately from the main house, even though it shares the garden and the address and cannot be sold apart from it.
A room inside the house with a kettle and an en suite is different. If the space has no kitchen of its own, or can only be reached through the family’s rooms, it is usually treated as part of the main house and has no bill of its own.
The 50% family discount
Since April 2014, an annexe in England gets half off its council tax when either of these is true:
- a relative of the people living in the main house lives in it as their only or main home;
- it is used by the household as part of the main home, for example as a spare bedroom or a teenager’s den.
“Relative” is drawn widely. It covers parents, grandparents, children, grandchildren, brothers and sisters, aunts, uncles, nephews and nieces, and many of the same relations by marriage.
When nothing is charged at all
An annexe is exempt from council tax altogether when the relative who lives there is a dependant. In the law this means someone who is:
- aged 65 or over; or
- severely mentally impaired; or
- substantially and permanently disabled.
This is the exemption most families building for an older parent end up using. It applies to the annexe only. The main house pays its own bill as before.
While the annexe is empty
An empty annexe that cannot be let on its own, because a planning condition ties it to the main house, is also exempt. That helps in the months between finishing the build and a parent moving in, and if the annexe falls empty later.
How to claim
Councils do not apply these automatically. When the annexe is first occupied:
- Tell the council that the annexe exists and who lives in it, with the date they moved in.
- Ask for the annexe discount or the dependent relative exemption, whichever fits.
- Keep a copy of the planning permission to hand. The condition that ties the annexe to the house is often what the council asks to see.
If the annexe already has a band, the council will usually backdate an exemption to the date the conditions were met, but do not leave it long.
A word on getting the band right
If you think the annexe has been put in too high a band, you can ask the Valuation Office Agency to check it. With a 50% discount or a full exemption, the band matters less, but it can matter again if the person living there changes.
Council tax is a small figure next to the build itself. For the big number, our granny annexe cost calculator gives a national guide price for your size and finish.