Annexe Council Tax Rules 2024: Is Your Band Correct?

Since April 2024, councils in England have new powers regarding council tax on annexes. This change, alongside existing complex discounts, means homeowners with annexes could be overpaying. It is important to ensure you are receiving the correct discounts and that your property's overall council tax band is accurate.

What has changed for annexe council tax in 2024?

As of 1 April 2024, local councils in England can choose to remove the 'empty and unfurnished' or 'second home' premium for annexes. Previously, an annexe that was part of a property but treated as a separate dwelling for council tax could attract a premium of up to 100% if it was considered a second home.

This change was introduced by The Council Tax (Chargeable Dwellings and Miscellaneous Amendments) Regulations 2023. It gives councils the discretion to charge the standard rate of council tax on these annexes instead of applying a premium. Because this is a discretionary power, the rules can now vary between different council areas in England.

How is an annexe normally treated for council tax?

The Valuation Office Agency (VOA), which handles council tax banding in England and Wales, typically assesses a property annexe separately from the main home. If the annexe is self-contained (with its own kitchen, bathroom, and living space), it will usually be allocated its own council tax band.

This means the property owner receives two separate council tax bills: one for the main house and one for the annexe. Each part of the property is liable for council tax independently, although significant discounts are often available for the annexe.

What discounts are available for property annexes?

Even if your annexe has its own council tax band, you may be entitled to a significant reduction. There are two primary national discounts available in England and Wales, which are not discretionary and must be applied by your council if you qualify.

• Family Annexe Discount: You can receive a 50% discount on the annexe's council tax bill if it is being used by a family member of the person living in the main house.
• Dependent Relative Annexe Exemption: You may be eligible for a 100% discount, making the annexe exempt from council tax. This applies if the annexe is occupied by a relative who is dependent on the person in the main house because they are over 65, substantially and permanently disabled, or severely mentally impaired.

To receive these reductions, you must apply directly to your local council. They are not applied automatically.

Could my annexe and main home be combined into one band?

In some circumstances, the VOA can treat a house and its annexe as a single property for valuation purposes, placing them together in one council tax band. This is known as banding as a 'single property' or 'composite dwelling'. This is often possible where there is a planning restriction that prevents the annexe from being sold separately from the main house.

When this happens, you receive only one council tax bill for the entire property. This can be simpler and may result in a lower overall tax liability than having two separately banded properties, even with discounts applied. The VOA will assess the entire property's value to determine the appropriate single band.

Why should I check my council tax band if I have an annexe?

The combination of separate banding, multiple available discounts, and the new discretionary council powers creates significant complexity. It is easy for homeowners with annexes to be on the wrong setup, leading to years of potential overpayments.

A professional review of your council tax band can confirm several key points. First, it verifies whether the VOA's decision to band your annexe separately was correct in the first place. Second, it ensures the band assigned to your main home accurately reflects its 1991 value, without being distorted by the presence of the annexe.

Given the new rule changes and the long-standing confusion around this topic, checking your band is a sensible step. It ensures you are not paying more than you need to, especially if you are not receiving a discount you are entitled to or if your properties could be merged into a single, lower band.