How best to get tax-efficient rental income from a 'Granny Annexe' to help fund care costs?

TripleH

lincroft1710 said:

If this annex is self contained (i;e; has its own kitchen and bath or shower room) then it should have its own Council Tax banding (under current rules your mother would be exempt from paying CT) and I don't think it would qualify for the Rent a Room scheme, as it isn't a room but effectively a self contained bungalow or flat

Not necessarily. My parent's cottage was completely detached from their house although it shared electric and gas meters.

It was marketed as a holiday let and not available for long term tenants, it also couldn't be sold independent from the house as a condition of planning. It was subject to business rates but these were valued at £nil rate. (Hence my suggestion of short term letting).

I don't know the exact situation only what my mother told me as my father dealt with it.

sheramber

If you want to check the tax position you might be better  posting in the tax cutting forum

lookstraightahead

MoneySavingAndy said:

lookstraightahead said:

When did your mum move in with your sister and did she give your sister any money to help buy the property, or did she move there later? 

Hi lookstraightahead, thanks for your response. My mother did give my sister some money to buy the overall property (and a similar amount to me as it happens, just to treat us equally), plus she paid for the refurbishment work on the Grannexe from some of the money raised by selling her house (keeping the balance invested for herself). How does that impact things now; that seems like history and not relevant as it was some years ago?

I was just thinking deprivation of assets issues - although if she had other income streams to pay for her care it might not be a problem. 

MoneySavingAndy

TripleH said:

lincroft1710 said:

If this annex is self contained (i;e; has its own kitchen and bath or shower room) then it should have its own Council Tax banding (under current rules your mother would be exempt from paying CT) and I don't think it would qualify for the Rent a Room scheme, as it isn't a room but effectively a self contained bungalow or flat

Not necessarily. My parent's cottage was completely detached from their house although it shared electric and gas meters.

It was marketed as a holiday let and not available for long term tenants, it also couldn't be sold independent from the house as a condition of planning. It was subject to business rates but these were valued at £nil rate. (Hence my suggestion of short term letting).

I don't know the exact situation only what my mother told me as my father dealt with it.

Yes, I think the same may apply here - i.e. planning constraints mean that it can't be sold as a separate property - but I will check that. Thanks.

lincroft1710

TripleH said:

lincroft1710 said:

If this annex is self contained (i;e; has its own kitchen and bath or shower room) then it should have its own Council Tax banding (under current rules your mother would be exempt from paying CT) and I don't think it would qualify for the Rent a Room scheme, as it isn't a room but effectively a self contained bungalow or flat

Not necessarily. My parent's cottage was completely detached from their house although it shared electric and gas meters.

It was marketed as a holiday let and not available for long term tenants, it also couldn't be sold independent from the house as a condition of planning. It was subject to business rates but these were valued at £nil rate. (Hence my suggestion of short term letting).

I don't know the exact situation only what my mother told me as my father dealt with it.

Shared g + e meters have no effect on whether or not an annex has its own CT band, neither does the inability of the annex to be sold independently of the main house (most annexes have this condition in their planning consent). Short term letting to someone for whom it is their sole or main residence would still make the annex subject to CT. If the annex is assessed for CT and is let out in the future it will be the tenant who would be responsible for paying the CT, not the OP's relative.


So as your parents' cottage was a holiday let (which OP's relative's property is currently not) it was correctly subject to business rates. 

lincroft1710

MoneySavingAndy said:

TripleH said:

lincroft1710 said:

If this annex is self contained (i;e; has its own kitchen and bath or shower room) then it should have its own Council Tax banding (under current rules your mother would be exempt from paying CT) and I don't think it would qualify for the Rent a Room scheme, as it isn't a room but effectively a self contained bungalow or flat

Not necessarily. My parent's cottage was completely detached from their house although it shared electric and gas meters.

It was marketed as a holiday let and not available for long term tenants, it also couldn't be sold independent from the house as a condition of planning. It was subject to business rates but these were valued at £nil rate. (Hence my suggestion of short term letting).

I don't know the exact situation only what my mother told me as my father dealt with it.

Yes, I think the same may apply here - i.e. planning constraints mean that it can't be sold as a separate property - but I will check that. Thanks.

Makes no difference as to whether or not the annex would be subject to its own CT band

unforeseen

Have you checked the planning permission to ensure that it doesn't limit use to family only? 

MoneySavingAndy

theartfullodger said:

Is the "barn" attached or part-of the main property please?? If no, then it's an AST (pretty much regardless of what the paperwork says), if yes, cannot be an AST.

Sorry to sound ignorant, but what is an 'AST' please? Thanks.

badger09

MoneySavingAndy said:

theartfullodger said:

Is the "barn" attached or part-of the main property please?? If no, then it's an AST (pretty much regardless of what the paperwork says), if yes, cannot be an AST.

Sorry to sound ignorant, but what is an 'AST' please? Thanks.

Assured Shorthold Tenancy