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Within a report about caring for Britain's ageing population the Centre for Social Justice suggests that householders who build a 'granny flat' should be exempt from capital gains tax when they come to sell it.

The Sunday Telegraph reports:

"A family who bought a house for £200,000, built a granny flat for £50,000 and sold the property for £400,000 would normally have to pay CGT of about 18 per cent on a share of the profits, or about £10,000. They would be spared this under the CSJ plan. Mr Duncan Smith's group is also studying plans to exempt granny flats from additional council tax or VAT charges."