Annual Tax on Enveloped Dwellings (ATED)

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.

Who needs to complete an ATED return?

Owners may need to complete an ATED return if their property:

• is a dwelling
• is in the UK
• was valued at more than:
  • £2 million (for returns from 2013 to 2014 onwards)
  • £1 million (for returns from 2015 to 2016 onwards)
  • £500,000 (for returns from 2016 to 2017 onwards)
• is owned completely or partly by a:
  • company
  • partnership where any of the partners is a company.
  • collective investment scheme – for example, a unit trust or an open-ended investment vehicle

A property is a dwelling for this purpose if all or part of it is used, or could be used, as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.

Property excepted for ATED

There are exceptions for:

• hotels
• guest houses
• boarding school accommodation
• hospitals
• student halls of residence
• military accommodation
• care homes
• prisons

When are ATED returns due?

Returns must be submitted on or after 1 April in any chargeable period and are due by 30 April. This is a tight timeframe in which to make the submission and settle any liability, or indeed claim relief.

Historically the valuation date for properties owned prior to 1 April 2012 was 2012, however there are fixed revaluation dates every five years and the second of those reviews will come around on 1 April 2022.

Whilst this is just a whistlestop away, it would be prudent for owners to prepare for ATED and understand their obligations, if they are likely to exceed the £500,000 threshold, well in advance of the chargeable period.

Would I have to pay ATED if I didn’t pay previously?

Although a property may have previously been outside of ATED, it may well fall into ATED for the coming 2023/24 year, but the key point is that owners will have little over 1 year to establish whether their company is within ATED and then to file a Return by 30 April 2023.

Penalties are charged for late Returns or submissions and our experience is that HMRC will pursue these vigorously.

Next steps

If you think you may be affected by the above then please do not hesitate to contact us.