COUNCIL TAX
GRANNY FLATS

 


 
 
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The term granny flats is often used to refer to self contained annexes within a main house  where the annex is occupied by an elderly relative of the occupants of the main house. (Sometimes the term is used generally to refer to self contained units in a house.)  For council tax purposes all Self contained units are treated as dwellings and are banded separately from the main property*. Both the main house and the self contained unit are regarded as dwellings and each of them is assigned to a valuation band. This means there could be a council tax bill for the main house and another for the annex. In order for the unit to be banded separately it is not necessary for it to have its own private entrance and it can also share services (e.g. water electricity, and gas supplies) with the main house. Even if the unit can not be sold separately from the main house it can still be assigned to its own valuation band. In determining if part of a building is a self contained unit the courts have decided on an objective “bricks and mortar test” which depends on the actual physical construction of the unit.  The intention of the construction or adaptation and the use to which it is put are not considered relevant to this decision. In a case that came before the high court the annex consisted of kitchen , bedroom living room with a combined shower/wc room. The unit had an exterior door and an interior door connecting it with the main house. The annex had shared services with the home and according to the family it was used an extension to their home, and the  kitchen  was a “Passover kitchen” , they used because they were orthodox Jews. The valuation tribunal considered that the annex was simply an extension to the family home and therefore did not band it separately.  This meant that the home and the annex would be aggregated and so that one council tax would be charged.  This decision was quashed by the high court which held that the tribunal hade erred in law because it took into account the intention of the occupiers in constructing the unit and the use they made of it, which were not relevant to the issue of whether or not it is self-contained. The question should be resolved by an objective “bricks and mortar test” which focuses on the physical construction of the unit – does it have the characteristics of a self contained unit.

In some cases however the occupant of the granny flat may be exempt from paying council tax. When a dwelling is the sole or main residence of a dependant relative of a person living in a dwelling in the same single property as the dependant relative then no council tax will be payable if the dependant relative meets certain criteria set out in legislation. (This is a Class W exemption that was added to The Council Tax (Exempt Dwellings) Order 1992). Class W exemptions can apply when the self contained annex is occupied by a person who is elderly, disabled, or severely mentally impaired and is a relative of a person who lives in another part of the same property (e.g. the main house). They can be blood relatives or relatives through marriage. The requirements for a Class W exemption are given in The Council Tax (Chargeable Dwellings, Exempt Dwellings & Discount Disregards) Amendment Order 1997 SI 656. A self contained unit that is occupied by a person exempt from council tax under a Class W exemption will cease to benefit from this relief if the dwelling is vacated by the elderly relative. However the accommodation remains a self contained unit and will continue to be banded for council tax purposes. The occupants of the main property may reoccupy the unit as part of the family home, or the whole building may be sold to a purchaser who does not want to use the unit as a separate dwelling. But it will remain separately banded because it is self contained accommodation. If the owners wish to get the annex deleted from the valuation lists, they may have to carry out structural alterations so that it ceases to be self contained. It may not be sufficient to take out the bathroom and kitchen fittings alone because these could easily be replaced. It may be necessary to remove water, gas and electric service pipes. When part of a property has been constructed or adapted as separate living accommodation it will continue to be separately banded as long as it is self contained. Alterations to the unit would have to be extensive and significant and completely alter the character of the room so that substantial reinstatement work would have to be done for it to be used in its original form. There are also Class T exemptions that can apply to unoccupied self contained units which are part of another dwelling or in the grounds of another dwelling and where the units cannot be let separately from the main building without contravening planning restrictions.

The present regulations which regard annexes occupied by elderly relatives as separate dwellings for council tax are under review and it is possible that they may change in the near future.

Council tax is a tax on dwellings and when it was brought in a new concept of dwelling was formulated by the legislation. This was the self contained unit which was defined as “a building or part of a building which has been constructed or adapted for use as separate living accommodation”. (Article 2 of The Council Tax (Chargeable Dwellings) Order 1992 SI No 549) The reformulation of the concept of dwelling represented a very significant change. Previously dwellings were defined with reference to the notion of hereditaments and this concept was also retained for council tax.  Thus there were two general categories of dwelling for council tax – self contained units and hereditaments.

 

 

 

 

 

 

 



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