Beware stealth tax on real property
THE recent Budget report proposes an innocent-looking amendment to TRP. As well as general increases and the introduction of new charge bands for properties over 199 square metres, outbuildings will be treated as part of a house from January next year. At present outbuildings are treated separately and have a lower TRP rate. Even a shed will be treated as an outbuilding, so the proposal may mean a significant increase in TRP for many people.
The effect is twofold: First, any outbuilding will be taxed at the same rate as a house, which is a lot higher.
Second, from January 2020 new charge bands are proposed, starting at 200 square metres. Each band will have a higher rate than the one below. So including an outbuilding may put the whole property into the next band.
For example: Suppose a house is 195 square metres and has a shed of 10 square metres. In 2019, the TRP charge would be £325.65 for the house (195 x £1.67) and £8.40 for the shed (10 x £0.84) making a total 2019 charge of £334.05.
From next January, the house and shed will be added together to give a total of 215 square metres. This is more than 199, so the TRP rates in the next band up will apply. For 2020 this will be £2.12 per square metre, meaning the 2020 bill for this house will be £455.80, a 36% increase. This is a lot more than the 10.2% across the board increase in the Budget proposals.
Few people live in their sheds, so I cannot see the logic in treating a shed and other outbuildings as part of a house. It is against the law to live in a shed, so why treat it this way?
MARK GILL
Quarry Lodge,
GY3 5BL.
Editor’s footnote: a Policy & Resources spokesman replies:
Thank you for the opportunity to respond to your correspondent’s letter. There may be some confusion with regards to the proposals for how TRP is applied to outbuildings and we hope we can provide some clarity here. As set out in the 2020 Budget report, the revision to the arrangements relating to outbuildings is not to raise additional revenues but to address an unfair anomaly which has resulted in different TRP rates being applied, dependent on whether an outbuilding is attached or detached.
The proposals included in the 2020 Budget report would remove this anomaly and also create a new category for outbuildings which are, for example, unused or derelict, for which a lower TRP tariff would apply. They would not be included when assessing the total TRP unit value of a domestic property.
For administrative efficiency and in order to ensure that TRP is not charged on a large number of items such as small sheds, coal bunkers, play houses, etc., the exemption previously applied for detached outbuildings under 10 square metres (approximately 107 square feet) would continue.