Stamp duty land tax will no longer apply to ‘Granny Annexes’

The new 3 per cent stamp duty land tax will not apply to so-called ‘Granny flats’ or annexes, Treasury Minister David Gauke has announced.

The news comes alongside several additions to the Finance Bill announced in the House of Commons of late, in which Mr Gauke explained that George Osborne’s second home stamp duty surcharge would not apply to such annexes.

“I have been made aware that the Bill as drafted might lead to some main houses with an annexe for older relatives attracting the higher rates of stamp duty land tax intended to apply to additional properties,” Mr Gauke said.

The surcharge was originally introduced as a clampdown on buy to let landlords and owners of second homes.

But homeowners with self-contained accommodation designed to house elderly relations faced being classed as owning a ‘second home’ under the new rules.

Now, homeowners who have paid stamp duty on a granny annexe worth less than a third of their property’s total value since April 1 are able to contact HM Revenue and Customs (HMRC) to pursue a refund.

However, it is worth noting that any properties that can, technically speaking, be accessed separately and sold on their own, will still be liable to the tax.

This means that a property with a converted basement with a separate entrance, or a farmhouse with a barn converted into a holiday let, will still attract the surcharge assuming that the second property is worth at least a third of the transaction value.

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