The short answer
- Read the planning condition firstIf the permission ties the annexe to the main house, letting it to anyone outside the household needs the council to agree.
- Varying the condition costs £89 or £608That is the fee in England from 1 April 2026, depending on the type of the original permission. The council makes a fresh decision and can say no.
- A holiday let pays council tax until it passes a letting testIn England it moves to business rates once it is available for 140 nights and let for 70 in a year.
- The Rent a Room scheme does not usually helpIts £7,500 tax-free allowance does not cover a home converted into separate flats, and holiday lets lost their own tax rules in April 2025.
The rules here are for England. Wales sets a higher bar for business rates, and Scotland has its own planning and letting rules, so check with your council there.
Who lives there
What changes when someone outside the family moves in
Families think about letting an annexe at different points: before the parent it was built for needs it, or after they have moved into a care home or into the main house. What you can do with it depends mostly on the wording of its planning permission.
When a council grants permission for a self-contained annexe, it usually adds a condition that the annexe may only be used as part of the household in the main house. The government's model wording, in Appendix A of Circular 11/95, says the building "shall not be occupied at any time other than for purposes ancillary to the residential use of the dwelling". Councils use it because a self-contained annexe let to strangers works as a second home on the plot, and planning law treats the use of one house as two separate homes as a material change of use under section 55 of the Town and Country Planning Act 1990.
The chart below sets out the four ways an annexe is usually used and what each one means. It assumes the usual condition is in place. If your annexe was built under permitted development, converted inside the house, or brought in as a mobile home, the position is different, and the guide to annexes without planning permission explains why.
Your parent or another relative lives there
What the permission was granted for- Planning
- Fits the usual ancillary condition, so nothing more to apply for.
- Council tax
- A 50% discount, or no bill at all if they count as a dependent relative, for example by being 65 or over.
- Income tax
- Any rent your parent pays is income for whoever owns the annexe, and may need to go on a tax return.
A tenant on a long let
Usually needs the council to agree- Planning
- Someone unconnected with the household living there breaches most ancillary conditions. Apply to vary the condition first.
- Council tax
- The annexe discount no longer applies, though ordinary discounts, such as for a single occupant, still can.
- Income tax
- Rent is taxable property income. The Rent a Room scheme does not cover a home converted into separate flats.
Holiday guests
Usually needs the council to agree- Planning
- Guests from outside the family breach most ancillary conditions as well. Ask the council before taking bookings.
- Council tax or business rates
- Business rates only once it passes the letting test (140 nights available and 70 let in England). Until then, council tax.
- Income tax
- Taxed as ordinary property income since the holiday let rules ended on 6 April 2025.
Empty, waiting for the next person
Allowed- Planning
- Leaving it empty does not breach the condition.
- Council tax
- Exempt while it stays empty, if a planning condition stops it being let separately.
- Income tax
- No income, so nothing to declare.
Assumes the planning permission carries the usual condition tying the annexe to the main house. Read your own decision notice: the wording varies from council to council. A general guide, not advice on any one family's situation.
The decision notice from when the annexe was approved has the exact wording, and your council's planning register will hold a copy if you cannot find yours. Do you need planning permission for a granny annexe explains how these conditions are set in the first place, and the granny annexes hub covers finding, building and paying for one.
Changing the condition
How to ask the council to change the condition
You cannot simply ignore an ancillary condition because your parent no longer lives in the annexe. The council can take enforcement action against a breach, so ask first.
- 1
Find the condition and read it closely
Before anything elseSome conditions name a relative, and some rule out holiday letting in so many words. The wording decides what you ask the council to change. - 2
Ask the council for pre-application advice
OptionalAsk whether your council offers it and what it charges. Advice at this stage can tell you whether a let is likely to be accepted and what the council would want in return. - 3
Apply under section 73 to vary or remove the condition
£89 or £608The fee in England from 1 April 2026 is £89 where the original permission was a householder application and £608 for other small applications. If the council treats the change as creating a separate home, it may ask for a full change of use application instead, at £610 for each new dwelling. - 4
Wait for the decision, then plan the let
Usually within 8 weeksThe council can grant the change, grant it with different conditions, or refuse it. If it refuses, you can appeal to the Planning Inspectorate.
Section 73 of the 1990 Act lets you apply for permission without complying with a condition attached to an earlier permission. The council looks only at the condition, but it is a fresh decision, and it will weigh things such as parking, neighbours and access past the main house. The fees above come from the Planning Portal's guide to fees in England from 1 April 2026, and the 8 week target is on gov.uk's after you apply page.
Changing the condition has knock-on effects. An empty annexe that can be let separately loses its council tax exemption, and the change may affect how the house is valued. Is a granny annexe subject to council tax covers the first, and do granny annexes add value the second. If your parent might move back in later, it may be worth asking for a condition that still allows family use, rather than removing it.
Holiday lets
Running the annexe as a holiday let
Once planning allows a holiday let, the main questions are whether you pay council tax or business rates, and which safety rules apply.
When a holiday let pays business rates instead of council tax
| England | Wales | |
|---|---|---|
| Each stay | 28 nights or fewer, let commercially | 28 nights or fewer, let commercially |
| Available to let in the last 12 months | At least 140 nights | At least 252 nights |
| Let in the last 12 months | At least 70 nights | At least 182 nights |
| Available in the next 12 months | At least 140 nights planned | At least 252 nights planned |
| If it does not meet the test | Council tax | Council tax |
Each stay
- England
- 28 nights or fewer, let commercially
- Wales
- 28 nights or fewer, let commercially
Available to let in the last 12 months
- England
- At least 140 nights
- Wales
- At least 252 nights
Let in the last 12 months
- England
- At least 70 nights
- Wales
- At least 182 nights
Available in the next 12 months
- England
- At least 140 nights planned
- Wales
- At least 252 nights planned
If it does not meet the test
- England
- Council tax
- Wales
- Council tax
Source: gov.uk, Introduction to business rates, self-catering and holiday let accommodation, checked October 2026.
The test is in gov.uk's guidance on business rates for self-catering accommodation. A new holiday let starts on council tax. Gov.uk adds that if you let only one property in England and its rateable value is below £15,000, you may be eligible for small business rate relief.
While the annexe is on council tax and nobody lives in it as their main home, the council may treat it as a second home. Gov.uk's page on second homes says this can mean up to twice the normal charge, so ask your council how it would band and charge the annexe before you set prices.
Gov.uk's guide to letting out a self-catering holiday home in England lists the rules a host must follow, including fire, gas and electrical safety and suitable insurance. It also says a national registration scheme for short-term lets in England is expected to begin in March 2027. Tell your home insurer and your mortgage lender before you take a booking, since a policy or a mortgage written for a family home may not cover paying guests.
Tenants and lodgers
Letting the annexe to a tenant or a lodger
A longer let brings in a steady rent, but the person living in the annexe has more rights than a holiday guest, and the rules changed in England this year.
A lodger shares your home
A tenant has more protection
Tenancy rules changed in May 2026
Checks and safety before the let
Gov.uk's page on renting out a property describes the lodger arrangement, where you share rooms such as a kitchen or bathroom with the person you let to. The change to tenancies is set out on gov.uk's page on assured tenancy forms from 1 May 2026 and in the government's guide to the Renters' Rights Act, and the duty to check documents is on gov.uk's right to rent page.
A tenancy can be hard to end quickly, which matters if the annexe might be needed again for your parent, or for a live-in carer to stay in. A holiday let keeps that option open more easily.
Tax on the rent
How the income from an annexe is taxed
Rent from an annexe is property income for whoever owns it. Two allowances people expect to use are narrower than they sound, and the special rules for holiday lets have gone.
| What it is | For a let annexe | |
|---|---|---|
| Rent a Room scheme | Up to £7,500 a year tax-free for furnished accommodation in your own home | Gov.uk says it cannot be used for homes converted into separate flats, so a self-contained annexe usually falls outside it |
| Property allowance | Up to £1,000 a year of property income tax-free | Available, but if you claim it you cannot also deduct your expenses |
| Ordinary property income | Rent less allowable expenses, taxed at your income tax rate | The usual route for a tenant or a holiday let, reported through Self Assessment |
| Furnished holiday lettings rules | A separate tax treatment for holiday lets | Abolished from 6 April 2025. Holiday income is now taxed like any other rent |
Rent a Room scheme
- What it is
- Up to £7,500 a year tax-free for furnished accommodation in your own home
- For a let annexe
- Gov.uk says it cannot be used for homes converted into separate flats, so a self-contained annexe usually falls outside it
Property allowance
- What it is
- Up to £1,000 a year of property income tax-free
- For a let annexe
- Available, but if you claim it you cannot also deduct your expenses
Ordinary property income
- What it is
- Rent less allowable expenses, taxed at your income tax rate
- For a let annexe
- The usual route for a tenant or a holiday let, reported through Self Assessment
Furnished holiday lettings rules
- What it is
- A separate tax treatment for holiday lets
- For a let annexe
- Abolished from 6 April 2025. Holiday income is now taxed like any other rent
Sources: gov.uk Rent a Room Scheme; gov.uk income tax when you rent out a property; HMRC Property Income Manual PIM4105. 2026 to 2027 tax year.
The figures are on gov.uk's Rent a Room page, gov.uk's guide to working out rental income and HMRC's Property Income Manual.
Letting can also affect capital gains tax when you sell. Gov.uk explains that if you let out part of your home, Private Residence Relief covers only the part you lived in, and lettings relief applies only where you lived there at the same time as your tenant. Granny annexe tax covers this in more detail. If the annexe is jointly owned with a parent, the rent is split by ownership, and buying a house with an elderly parent explains how ownership shares are set up.
Questions
Questions families ask about letting an annexe
Only if its planning permission allows it. Annexes are usually approved with a condition that they are used as part of the main house, and holiday guests are outside that. You can apply to the council under section 73 to vary or remove the condition. Once the change is agreed, the let pays council tax at first and business rates once it meets the letting test.
You can apply for that, but say so in the application. An annexe approved for family use usually carries a condition that rules out letting, so a holiday let needs either a permission that allows it from the start or a later change to the condition.
Rent from a holiday let is taxed as ordinary property income, at your income tax rate, after allowable expenses. The separate furnished holiday lettings rules ended on 6 April 2025. The Rent a Room scheme does not usually cover a self-contained annexe. Letting can also reduce the capital gains relief on your home when you sell. Granny annexe tax covers the capital gains side.
A lodger shares your home, including rooms such as the kitchen or bathroom. Someone living in a self-contained annexe with their own facilities is usually a tenant rather than a lodger, and the Rent a Room scheme does not usually apply. Letting to anyone outside the household also needs the planning condition to allow it. Take advice on the tenancy before they move in.
Yes. A parent living in the annexe as part of the family fits the usual planning condition, and the council tax discount or exemption for a relative still applies. The rent is income for whoever owns the annexe and may need to go on a tax return. If your parent needs help at home, you can search for carers near you and compare their rates.