Granny Annex Purchase Tax Relief

This relief can be a great help for those looking to purchase a home with an annexe, such as for a family member. But what does the “subsidiary dwelling” exception mean?

The relief applies when the market value of the annexe is below one third of the total purchase price. In this case, HMRC will treat it as a subsidiary dwelling and not as subject to the additional 3% surcharge on top of SDLT standard rates on additional properties. Furthermore, it will also be eligible for multiple dwellings relief (MDR).

In order to take advantage of this relief, you must be purchasing a dwelling with an attached or separate annexe located within the curtilage.

This could be something like an outbuilding or a cottage in the grounds of the house. Upon completion of purchasing both properties, you will own two dwellings - making it potentially subject to 3% surcharge unless you are eligible for this particular relief.

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