Treasury announces new rules for tax on annexes
Yesterday, the Government sprung another surprise alteration in tax rules, for anyone purchasing a house including an annex .
The announcement came after criticism that many homes with small annexes would be open to the 3% Stamp Duty surcharge.
Rules
Addressing these concerns, the Treasury has proposed a new set of rules, which will ultimately mean that less homes with annexes will be subject to the additional charges.
Now, any annex worth less than the total value of the property will not qualify for increased fees. The Treasury said it decided to make the change to, ‘iron out technical unfairness.’
Previously, the Treasury said that only around 1,000 sales of homes with annexes per year would be affected by the higher Stamp Duty rate. It now believes this figure will be cut further.
Common sense
Jeremy Leaf, an estate agent from North London, believes that common sense has won through.
Leaf said, ‘the government was trying to defend the indefensible. How would a granny flat tax surcharge have operated? How would it be enforced? Who would carry out the valuations? And perhaps, more pertinently, how much additional revenue would it have raised?’[1]
Treasury announces new rules for tax on annexes
Liability
In order to be liable for the increased rate of tax, annexes must:
- be able to be sold separately from the main property
- have their own entrance
- have a separate electricity and water supply
- receive a council tax bill
- have a total value of £40,000 or more
However, it must be noted that where a property with an annex does qualify for the Stamp Duty surcharge, the increased rate applies to the entire complex, not the annex alone.
The Treasury has stated that anyone who had previously paid too much tax would be able to claim a refund.
[1] http://www.bbc.co.uk/news/business-36023867