'Granny flat' tax breaks considered

Hundreds of thousands of families could benefit from tax breaks on "granny flats" under plans being considered by the Government.

Communities Secretary Eric Pickles said he is keen to scrap council tax for live-in annexes, arguing the current rules are "fundamentally unfair".

It is believed ministers are also considering overhauling planning regulations and fees to make it easier for homeowners to convert garages and other outbuildings.

Mr Pickles told the Daily Telegraph: "We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations.

"We should support homeowners who want to improve their properties and standard of living. These reforms should also play a role in increasing the housing supply."

The MP said it was unfair for households to be charged twice by paying council tax on their homes and annexes - which are regarded as separate dwellings.

It is estimated that as many as 300,000 households in England could benefit from the change.

The reforms are expected to form part of a package of policies to increase housing supply and address the shortage of affordable homes over the next two years.

Labour said it was unclear who would benefit from any further relaxation of the tax rules as annexes occupied by dependants aged over 65 are already exempt.

Government sources conceded that the timing or detail of any change, which would probably require primary legislation, had not yet been considered.