Annexe change of use and business rates/ council tax

Level 1
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Hello. We would really like to air bnb our annexe. It was built in the 90s as a 1 bedroom, 1 living area,  kitchen and bathroom.  Own front entrance and interconnecting door with main house in coridoor on first floor. Building permission stated it could not be rented out. When we moved in, we removed the kitchen and turned into an office/ utility area, to avoid paying 2 council tax bands. We are considering reinstalling kitchen, to air bnb. We have contacted planning consultant to apply to council for change of use. Has anyone else had any experience in this area? What was your outcome? We are also unsure if we could rent it under the rent a room relief and pay council tax, or go via business rates route, again does anyone have any experience or advice? Sorry for long question.  Many Thanks 

3 Replies

Re: Annexe change of use and business rates/ council tax

in
England, United Kingdom
Level 10

@Charlene214 I hope your consultant has told you that you don't need planning permission to rent a room but said 'room' does need to be accessible from the house (not sure if you need to actually access it this way or if door can be kept locked). If you go for planning and a business rate approach you won't pay any rates BUT you will pay capital gains tax when you sell. Finally if rent a room you get first 7k (?) free of tax. If you go Furnished Holiday Let then you can allocate the rent between owners any way you like so could benefit from 12.5K tax free.

Re: Annexe change of use and business rates/ council tax

in
England, United Kingdom
Level 1

@Charlene214 Hello, I hope you don’t mind me asking you a question but you seem knowledgeable? I’m thinking of becoming a host and renting out our converted garage/ garden annexe. It has a shower room but no kitchen. Just a kettle, toaster and fridge. Does this require me to pay council tax? I’m concerned that if So , and it doesn’t rent out very often, I’ll be left with a big council tax bill every month! The garage was already converted when we bought the house, we just added a shower room. I’d be grateful for any info you have. Thank you so much. Paula Graham. 

Re: Annexe change of use and business rates/ council tax

Level 1

Hi Paula, I believe a kitchen is classed as something where you could cook and prepare food, so it is a bit of a gray area. It might be worth checking with your council just to make sure. All the best

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