Granny Annexe Council Tax: Exemption & Reductions

If you’re considering adding a granny annexe to your property or already have one, understanding how council tax applies is crucial. After all, nobody wants to pay more tax than they need to! Annexes have special rules that apply only to this specific type of building in specific cases. This helpful guide will walk you through the ins and outs of granny annexe council tax in the UK. With a few minutes, you’ll easily be able to understand the rules and any potential savings!

Table of contents:
What is a granny annexe?
What is council tax in the UK and why is it needed?
How does council tax work for granny annexes?
Conditions for council tax exemptions and reductions
How to apply for council tax exemption or reduction
FAQ

What is a granny annexe?

A granny annexe, also known as a self-contained annexe, is a separate living space that is usually attached to or located on the same property as the main house. Granny annexes get their name from the fact that they are often used to house elderly relatives or family members. This is a great way to provide independent and dignified living to people while enabling them to remain close to family.

What is council tax in the UK and why is it needed?

Council tax was introduced in 1993 and it replaced the Community Charge, which was also know as the “poll tax”. The Council Tax was a major improvement on the previous system, which didn’t take into account resident’s individual circumstances. If you were from a low-income household, you paid the same as the wealthiest homeowners. Council tax applies in England, Scotland and Wales. In Northern Ireland the equivalent is simply called “rates”.

Under the Council Tax taxation system each property is assigned a band that is decided based on its value. More expensive properties will have a higher taxation band and properties with a lower value have a lower band. Council Tax applies to you if you are a tenant or a homeowner.

Since this is a local tax, your tax rate will be set by the local council. The rates vary across parishes and can be based on things such as local expenses and spending. Council Tax typically makes up about a quarter of the council’s income and is needed to fund local services and facilites, such as:

Your Council Tax makes up around a quarter of the council’s income, so it is absolutely vital to support local services and infrastructure like street lighting, rubbish collection, libraries, youth clubs, care services, parks and recreation facilities, police and fire services. For example, in the years 2023-24, 61% of council spending was dedicated to adult social care and children’s services.

2025 April council tax change implications for granny annexes

In most cases a granny annex is considered to be a part of the main property for council tax purposes if they are used by family members or are not self-contained. Your annexe is self-contained when it is a stand-alone structure and can be lived in independently. The new Council Tax increase changes mean that if you pay council tax on your annexe, it will go up by an average of about 5%.

In the photos above: Summerhouse24 granny annexe

How does council tax work for granny annexes in the UK?

Before 2014 council tax had to be paid on all annexes. These days however there are exemptions and reductions, which we’ll cover later on. Generally, a self-contained annexe is subject to council tax, as it can be used separately from the main house. In this case the annexe would classify as an ancillary residential accommodation. Ancillary means it is still on the same property, but can essentially function independently.

This is the criteria that defines a self-contained annexe:

The annexe has to be able to be used as separate living accommodation.
It should be a self-contained unit and not be spread across different parts of the main property.
The annexe usually needs to include areas for living, sleeping, food preparation, and washing, along with its own WC.

So, if your annexe doesn’t have facilities and cannot be used as a an independent place to live, it is exempt from council tax and is considered a part of the main dwelling. But, even if you have a self-contained annexe, there are a few different reasons you can either get a tax reduction or even exemption.

Conditions for council tax exemptions and reductions

Depending on your conditions, you may be eligible for a full council tax exemption or partial reduction of 50% or 75%. Let’s take a closer look at conditions and eligibility below.

Full exemption

You may be eligible for a full council tax exemption if you’re housing a relative who is:

Aged 65 or over
Severely mentally impaired
Substantially and permanently disabled

Full-time students and children under the age of 18 also qualify for full exemption.

50% reduction

A 50% reduction in council tax may apply if:

The annexe is used by the occupier of the main house
It’s lived in by a relative (not meeting the full exemption criteria)

Additional 25% discount

An extra 25% discount might be available for sole occupiers, such as an adult child living in the annexe.

Unoccupied annexes

If the annexe is unoccupied and planning regulations prevent it from being leased separately from the main dwelling, you may be eligible for a discount.

How to apply for council tax exemption or reduction?

Here is a short step-by-step explanation of how to apply for a council tax exemption or reduction:

Contact your local council: Reach out to your Local Authority for specific guidelines and application procedures.
Provide necessary documentation: This may include proof of relationship, age, or medical conditions for dependent relatives.
Complete the application form: Fill out the required forms provided by your council.
Submit and wait for assessment: Your council will review your application and inform you of their decision.

Frequently asked questions about Granny Annexe

Do you need planning permission for a granny annexe?

In most cases you need planning permission, though it may also be possible to build a granny annexe without planning permission as a ‘caravan’ – for this, it needs to meet certain criteria. You can read more about granny annexe planning permission here.

Do you have to pay council tax on a granny annexe?

It depends on the specific circumstances. You may be exempt, eligible for a reduction, or even required to pay full council tax. This depends on who occupies the annexe and how it’s used.

Are rules about granny annexe council tax different by council?

Yes, while there are national guidelines, local councils are responsible for applying exemptions and discounts. Always check with your Local Authority for the most up-to-date and accurate information, as rules may be applied slightly differently.

What if my situation changes?

If there are any changes to the occupancy or use of your granny annexe, inform your local council immediately as this may affect your council tax status.

How do I remove council tax from an annexe?

Conclusion

Hopefully, you now have a good understanding of granny annexe council tax rules. If you’ve not built your annexe yet, make sure to read our granny annexe guide which covers everything from planning requirements to costs.

Understanding granny annexe council tax can save you money and ensure you’re complying with local regulations. Remember, while this guide aims to provide general information, it’s important to always check with your local council about the most up-to-date details that are relevant to your area.

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Granny Annexe Council Tax Guide: How It Works, Exemption & Reductions