Annual Tax on Enveloped Dwellings (ATED) is an annual charge that can apply where UK residential property valued at more than £500,000 is owned by a company, a partnership with a corporate member, or certain collective investment vehicles.
What property is within scope?
ATED applies to UK property that is used, or suitable for use, as a single dwelling (such as a house or flat), including associated gardens and grounds, or that is being constructed or adapted for residential use.
Where a property is partly residential and partly non-residential, only the residential element is considered. Each self-contained dwelling within a building is assessed separately.
ATED does not apply to properties such as student accommodation, boarding schools, armed forces accommodation, care homes, hospitals, prisons, or hotels and similar establishments.
How is ATED calculated?
The amount of Annual Tax on Enveloped Dwellings (ATED) payable is calculated using a banding system based on the value of each dwelling. The rates for the ATED years from 1 April 2025 to 31 March 2026 and 1 April 2026 to 31 March 2027 are as follows:
| Value of dwelling | ATED due (before reliefs) | |
| 2025/26 | 2026-27 | |
| £500,001 – £1,000,000 | £4,450 | £4,600 |
| £1,000,001 – £2,000,000 | £9,150 | £9,450 |
| £2,000,001 – £5,000,000 | £31,050 | £32,200 |
| £5,000,001 – £10,000,000 | £72,700 | £75,450 |
| £10,000,001 – £20,000,000 | £145,950 | £151,450 |
| £20,000,001+ | £292,350 | £303,450 |
The ATED due for each band increases in line with inflation (CPI) each year.
If a property is acquired during the ATED year or qualifies for a relief or exemption for part of the year, the ATED payable is apportioned based on the number of days the property is owned in the year.
Property valuations
For ATED purposes, the acquisition price is generally used when a property is purchased from a third party.
Properties must then be valued at fixed valuation dates. For ATED years 2023/24 to 2027/28, the relevant valuation date is 1 April 2022 (or the acquisition date, if later). Revaluations take place every five years, with the next valuation date being 1 April 2027.
A revaluation is also required following a substantial acquisition or disposal of part of a dwelling where the consideration is £40,000 or more.
Although a formal valuation is not mandatory, a professional valuation is recommended, particularly where values are close to an ATED threshold. In such cases, it may be possible to seek HMRC confirmation of the appropriate banding in advance via a Pre-Return Banding Check.
Exemptions and reliefs
Certain entities, including charitable companies and public bodies, may be exempt from ATED and therefore outside the regime.
Reliefs may apply where a dwelling is, for example, used in a property rental, development or trading business, open to the public, occupied by qualifying employees, used as a farmhouse, or owned by a registered provider of social housing. Even where full relief applies, an annual ATED return must still be filed.
Filing and payment deadlines
The ATED year runs from 1 April to 31 March, with returns and payments due at the start of the period. For example, returns for the year to 31 March 2027 must be filed, and any tax paid, by 30 April 2026.
Returns for properties acquired during the year are due within 30 days of acquisition (or within 90 days for newly built dwellings).
Interaction with other taxes
The ATED rules closely align with the Stamp Duty Land Tax (SDLT) regime that imposes a flat 17% rate on certain corporate acquisitions of residential property. An ATED exposure may indicate that this higher SDLT rate should have applied.
How we can help
Failure to identify and comply with ATED obligations can result in significant historic liabilities, interest and penalties. PM+M can assist with ATED compliance, valuations, relief claims and interaction with related property tax rules. If you would like more information, or are unsure of next steps, get in touch with tax manager, Julie Walsh, by clicking the button below.
