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Extensions and annexes to get tax break

It was announced during the recent autumn statement that the chancellor intends to reduce council tax bills for properties that have annexes built for family members. Seemingly contrary to the controversial spare room subsidy, from next April, the Government is planning to reduce council tax bills for houses that add extensions by 50%.

It is estimated that 24,150 homes in England have such extensions, which are commonly used to either help care for either elderly relatives or to provide separate living quarters for young people who can’t yet afford to get on the property ladder.

It was felt that adding extra taxes to these extensions is an unfair disadvantage for families that wish to live together.

This was just one of many measures the chancellor announced in his statement, as ministers put current legislation under review to make it easier for homeowners to make property developments.

The existing legislation sees these extensions qualify as separate accommodation – and therefore liable to the full council tax rate. It has hoped the changes will save the average household roughly £485 a year.

A spokesperson for the treasury suggested that the tax break could urge others to extend their houses. It could also have a fringe benefit in that families that are saving council tax may use the extra income to make improvements to their current extensions – such as interior decoration or hardwood flooring. From Liverpool to Luton, homeowners are welcoming the tax break and the drive for property building and development can only be positive for growth in this market.

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