By Claire West

Local Government Secretary Eric Pickles has announced new government plans to remove an unfair Council Tax surcharge on family annexes and home improvements, to help support extended families. In total, 3 taxes are being cut on home improvements to increase provision of local affordable housing for families both young and old.

Many families benefit from living in properties with self-contained annexes that allow them to house or care for extended family members. The current Council Tax system unfairly penalises those with family annexes through double taxation - householders are billed a second time for the annexes in addition to their payment for their main property. Mr Pickles is proposing a new national discount for all family annexes (not just those for older people), as a quick and easy way to remove this Council Tax surcharge from the system, saving an average £485 a year on a typical £2,427 combined yearly bill.

The government is also confirming that it intends to remove the community infrastructure levy on self-build properties, including all extensions, family annexes and home improvements. Ministers also intend to seek to remove Section 106 housing levies on such annexes and extensions — a ‘stealth tax’ slowly being introduced by town halls.

With both an ageing population and young people finding it difficult to get on the housing ladder, the government wants to remove barriers to extended families living together. Ministers believe the tax cut will ultimately save taxpayers’ money by helping reduce adult social care costs in the long-term. It will deliver against the government’s commitment to help more people live independently. The reforms will also increase housing supply and support the construction trade.

Mr Pickles said:

I believe the government should be supporting hard-working families who do the right thing. Removing the family tax penalty on annexes and home improvements will help provide more affordable housing and strengthen the bonds that tie society together.

By cutting town hall taxes on family annexes, extensions and home improvements, we are supporting aspiration and choice, as well as giving a boost to the construction sector and local traders.

These common sense tax cuts will increase the provision of affordable housing to those on lower and middle incomes. Encouraging extended families to stay together will reduce social care costs to the taxpayer, and protect independence and dignity for the young and old.