In respect of annexes, there is already a Council Tax exemption where it is occupied by a dependant aged 65 years or over, or if severely disabled. [1] However, it does not apply to families. From 1 April 2014, The Council Tax (Reductions for Annexes) (England) Regulations 2013 will offer a discount of 50% council tax for annexes occupied by relatives In England.

The discount applies if the following conditions are met:

  • the annex forms part of a single property [2] which includes at least one other dwelling; and
    • it is being used by a resident of that other dwelling or,
    • it is the sole or main residence of a relative of the person who is liable to pay council tax in respect of that other dwelling.

A person (“P”) is to be regarded as the relative of another if P—

  • is the spouse or civil partner of that person, or
  • is that person’s parent, child, grandparent, grandchild, brother, sister, uncle or aunt, nephew or niece, great-grandparent, great-grandchild, great-uncle, great-aunt, great-nephew or great-niece, or
  • is that person’s great-great-grandparent, great-great-grandchild, great-great-uncle, great-great-aunt, great-great-nephew or great-great-niece

A relationship between two persons who are not married but are living together as a married couple shall be treated as a spouse and a relationship between two persons of the same sex living together as if they were civil partners shall be treated as a relationship by civil partnership. Step children are treated as being the child of the person.

According to the Department for Communities and Local Government, [1] there are an estimated 24,150 family annexes in England, but ministers believe far more households could be helped by tax cuts that encourage more annexes – and more conversions of outbuildings and new extensions.