A stamp duty surcharge was introduced in April 2016, which would affect anyone buying a property with a self-contained annexe. The surcharge would have meant an increase to the buyer’s tax bill, potentially to the value of £1000s, because it would require any purchaser of an additional property to pay 3% on top of the standard tax rate.
In addition to the financial repercussions for families, charities and older people’s groups criticised the clause which affected those wanting to buy a properties with so-called ‘granny annexes’. They stated the purchase of homes with granny annexes could become cost prohibitive, leading to increased isolation among the elderly. The social value of granny annexes was also praised by the Chartered Institute of Taxation, who had similar concerns regarding the proposed surcharge.
The Proposed Amendment
Thankfully, the criticism levelled at this new surcharge has paid off, as an amendment was introduced in mid-2016 by the financial secretary to the Treasury. The government amendment will apply where a property consists of two or more dwellings in the grounds of a main property. The value of the “main” property must be at least two thirds of the total price.
The exemption will only apply in certain circumstances. The property has to be made up of two or more dwellings within the grounds of a main property. This main property has to be worth a minimum of two thirds of the overall value. This would mean for a property worth £750,000, the granny annex must be worth under £250,000, otherwise a 3% surcharge will be payable on the £750,000.
Good News for Buyers and Sellers
In addition to the surcharge affecting buyers, there was also a concern that the stamp duty surcharge would make families reconsider creating an additional dwelling in their property. Those considering an additional luxurious space, such as those offered by http://www.annexespaces.co.uk/, will now be able to relax in the knowledge that by improving the quality of living accommodation in their property, they won’t also be putting someone off because of the high taxes to pay.
Whilst the amendment hasn’t yet been made law, the change will apply retrospectively to purchases since 1 April 2015. In addition, because it is a government amendment and highly likely to be accepted, purchasers can act as though it already has been passed.
About2ZF77
