The Treasury estimates 24,150 homes in England alone have built “granny flats” to help care for elderly relatives. They are also increasingly being built for young adult children, who cannot afford to get on to the property ladder.
Under existing rules “granny flats” are regarded as separate dwellings and are liable to be charged full rates of council tax by local authorities. The Treasury said this unfairly penalises extended families living together, which is why they have introduced the tax break.
“The Government will implement a national Council Tax discount of 50% for property annexes from April 2014. This will support extended families living together, for example with children saving for a new home or elderly parents,” said a spokesman for the Treasury.
The spokesman added the tax break could incentivise other households to build extensions for family members.
Ministers are also reviewing legislation to remove red tape that can make it more difficult for home owners to adapt properties.
At present, garage conversions are hit with a ‘community infrastructure levy’, hitting homeowners with a bill of several hundread pounds for building on their property. Ministers are seeking to remove this ‘stealth tax’, which is increasingly being introduced by town halls.
Autumn Statement: latest updates
Autumn Statement: Winners and losers