Thousands miss out on 50 per cent council tax discount because they don't apply - what you need to know

Temie Laleye
Thu, 02 Apr 2026 10:44:43 +0000

Thousands of households could be missing out on council tax savings worth hundreds of pounds each year without realising it.

Families with granny annexes may be entitled to discounts, but many are not claiming them.

Households with granny annexes on their property may be eligible for significant council tax savings worth hundreds of pounds annually, according to living space specialists at NorweiganLog.co.uk.

However, these reductions are not applied automatically by local authorities.

This means families must submit their own applications to benefit.

The company said eight in ten of its granny annexe enquiries are linked to caring for elderly relatives or multi-generational living.

With demand for this type of housing growing, experts are urging homeowners to understand the discounts and exemptions available to avoid overpaying on council tax.

Annexes are usually treated as separate properties for council tax purposes, meaning they receive their own bill.

According to GOV UK guidance, homeowners may qualify for a 50 per cent reduction on their annexe council tax under certain circumstances.

This half-price discount applies when the additional living space functions as an extension of the primary residence, such as being used for a home office or gym.

The same 50 per cent reduction is also available when family members occupy the annexe as their principal residence, including parents, grandparents or grown-up children.

Homeowners can apply for complete exemption from council tax on their annexe when specific criteria are met regarding the occupant.

Full relief is available when the relative residing in the annexe is aged 65 or older, according to the guidance.

The exemption also extends to situations where the occupant has a disability or experiences serious mental health conditions.

These dependent relatives must be living in the annexe as their main home to qualify for the total waiver.

Unlike the 50 per cent discount available for general family occupation, this full exemption removes the council tax liability entirely for qualifying households with vulnerable or elderly dependents.

Ed Taylor, CEO of Norwegian Log, said: "We're seeing a real increase in people looking towards multi-generational living and bringing elderly parents into their homes. Granny annexes have always been a great way to keep loved ones close while everyone still gets to maintain their own space."

He emphasised the importance of understanding council tax obligations before making such a significant decision.

"Knowing these things are crucial as you have to apply for the exemptions and discounts yourself through your local council.

"Councils don't apply these automatically so if you don't apply, you could end up paying the full council tax amount even if you are eligible for a discount," Mr Taylor added.