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'Granny flats' to get tax breaks under new proposals

Published 02nd Jun 2012

Eric Pickles announces plans to scrap council tax bills for live-in annexes and make it easier to convert garages

Eric Pickles says the plans should benefit many familes and pensioners. Hundreds of thousands of families could benefit from tax breaks on "granny flats" under plans being considered by the government.

The communities secretary, Eric Pickles, said he was keen to scrap council tax for live-in annexes, arguing the current rules were "fundamentally unfair". It is believed ministers are also considering overhauling planning regulations and fees to make it easier for homeowners to convert garages and other outbuildings.

Pickles told the Daily Telegraph: "We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations. "We should support homeowners who want to improve their properties and standard of living. These reforms should also play a role in increasing the housing supply."

The MP said it was unfair for households to be charged twice by paying council tax on their homes and annexes - which are regarded as separate dwellings.

It is estimated that as many as 300,000 households in England could benefit from the change. The reforms are expected to form part of a package of policies to increase housing supply and address the shortage of affordable homes over the next two years.

Labour said it was unclear who would benefit from any further relaxation of the tax rules as annexes occupied by dependants aged over 65 are already exempt.

Government sources conceded that the timing or detail of any change, which would probably require primary legislation, had not yet been considered. Such a move would also reduce the income of local councils at a time when town halls are already being forced to implement severe spending cuts.

The shadow communities secretary, Hilary Benn, said: "This is a decidedly peculiar claim by Eric Pickles as occupied granny flats have been exempt from council tax since 1997.

"It is therefore extremely unclear exactly which pensioners the government expects to benefit from these changes, and the granny-tax fiasco doesn't give us confidence that they will get this right.

"This seems to be nothing more than an attempt to deflect attention from their housing crisis. What we need is to get building and get the economy moving again. That's why Labour is proposing to build 25,000 new affordable homes and a temporary cut to the rate of VAT. "

Under the 1997 regulations, council tax is not paid on annexes occupied by relatives who are over 65, "mentally impaired", or "substantially and permanently disabled".

Source: ' Guardian '

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