Do garden rooms affect council tax?

Garden rooms have become increasingly popular over the years, offering the additions of versatile standalone structures to UK homes. However, a rising question follows, will adding an annex to a home require additional council tax?  

What is Council Tax?

Council Tax is a domestic property-based tax, established by the Local Government Finance Act 1992, to fund local services. This may include services such as waste collection, education, library and leisure services, and social care. The tax payable will be determined based on the value of the property and the valuation band it falls under.[1]

Are garden rooms subject to council tax?

A garden room will only be subject to Council Tax depending on its use and whether it is considered as a separate dwelling facility, which are generally subject to a council tax bill.

When is the council tax usually required on a garden room?

 Council tax will usually be required on a garden room if:

1. It is used as a self-contained living space  (an annex)
2. Where a separate area of living accommodation is made, creating an annex, it will normally require its own council tax[2]. An annex is categorised by the Valuation Office Agency (a government body that value properties for tax) as a dwelling with its own cooking, toilet and washing facilities as well as having its own entrance. The annex may be within the main home or separate[3].
3. However, having an annex to a home may entitle the owner to obtain a 50% discount on the council tax bill if it is being used as part of the main home. Alternatively, if the annex is being used as a main home, the same discount may apply to the council tax bill if it is a person related to the owner of the main property.

• It is being used to run a business
• Where the garden room is being used as a space for business purposes, such as an office or studio, the owner of the property will be required to pay business rates on the part of the property being used for the business. This is a separate tax in addition to the council tax required to be paid for the rest of the property[4].

• It changes the market value and banding of your property
• Where any build increases the property value will be reflected in the valuation for banding purposes and potentially reassess the property’s council tax[5].

When is a council tax exempt?

 A garden room is generally exempt from Council tax if they are used for incidental purposes, in cases for leisure or personal activities, such as hobby rooms, storage, or home gyms. If a garden room has been built under permitted development, not requiring any planning permissions, enhancing the enjoyment of the main home without it being an independent living accommodation, would exempt it from an additional council tax bill[6].

[1] https://www.gov.uk/government/publications/paying-the-right-level-of-council-tax-a-plain-english-guide-to-council-tax/paying-the-right-level-of-council-tax-a-plain-english-guide-to-council-tax#:~:text=Annexes:%20Family%20discount,Tax%20on%20the%20main%20property.

[2] https://www.gov.uk/guidance/understand-how-council-tax-bands-are-assessed#council-tax-bands-and-annexes

[3] https://www.northyorks.gov.uk/council-tax/money-your-council-tax/money-council-tax-annexes

[4] https://www.gov.uk/run-business-from-home#:~:text=sell%20your%20home.-,Business%20rates,your%20local%20assessor%20in%20Scotland).&text=You%20may%20qualify%20for%20small,of%20%C2%A315%2C000%20or%20less.

[5] https://www.gov.uk/guidance/understand-how-council-tax-bands-are-assessed#council-tax-bands-and-annexes

[6] https://www.gov.uk/guidance/council-tax-manual/council-tax-practice-notes#:~:text=4.7%20Use%20as%20a%20%E2%80%9Cprivate%20dwelling%E2%80%9D&text=%E2%80%9CPrivate%20dwelling%E2%80%9D%20in%20the%20above,applicable%20(CTM:%20PN6).