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Homeowners with ‘granny flats’ look set to avoid 3% Stamp Duty surcharge

Property owners with a ‘granny flat’ in their grounds look set to avoid the 3% Stamp Duty surcharge aimed at buy-to-let investors and second homes following an intervention by Sir Eric Pickles.

MPs gathered in the House of Commons yesterday to discuss the details of the Finance Bill which, among other objectives, aims to address the issues of fair taxation.

In the current version of the Stamp Duty surcharge rules, an annex which has separate access to the main property is classed as second home, and will attract the 3% premium if it is valued at more than £40,000. This means that when the owner comes to sell up, prospective buyers face a steeper tax bill because they are a buying the main residence and paying 3% additional Stamp Duty on the value of the granny flat.

The Financial Secretary to the Treasury, David Gauke, has agreed to submit an amendment to the rules ‘to correct the error and ensure fair treatment for annexes’.

Pickles, the former secretary of state for communities and local government, said he was grateful for Gauke’s co-operation.

“It is important in terms of social policy, as annexes are used not only by elderly relatives but by other family members, disabled children with special needs and so on,” said Pickles.

“The government is making an important statement that these annexes should prosper.”

Pickles told Gauke he would be closely scrutinising the details of the amendment.


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