To ask Her Majesty's Government in what circumstances the Valuation Office Agency takes into account the presence of (a) a garden shed, and (b) a greenhouse, as a material consideration when valuing or revaluing a property for the purposes of (1) council tax, (2) capital gains tax, and (3) inheritance tax. [HL6078]

Section 3(4) of the Local Government Finance Act 1992 states that a yard, garden outhouse, or other appurtenance belonging to or enjoyed with property used wholly for the purposes of living accommodation will be included as part of the dwelling. This would include any sheds and greenhouses within the domestic curtilage of a property. There is no evidence that such features are value significant attributes.

The VOA council tax property attribute data guide specifically states that sheds and greenhouses should be ignored: “Outbuildings present (ignore sheds/greenhouses/outside WCs)”.

If a property has to be valued for inheritance tax or capital gains tax, it is necessary to estimate its market value at the relevant valuation date. The definition of market value for capital gains tax is contained in Section 272 of the Taxation of Chargeable Gains Act 1992 and for inheritance tax purposes in Section 160 of the Inheritance Act 1984. The statutory definitions are couched in similar terms, and essentially require an estimate to be made of the price that a property would fetch if it were sold in the open market.

In general terms, if a garden shed or a greenhouse adds any value to a property then it is, in theory, reflected in the valuation. However, in practice such outbuildings are generally of de minimis value when compared to the value of the main dwelling, and nothing will in practice be specifically added to the valuation.