Annual Tax on Enveloped Dwellings (ATED) – do you need to submit a return?

Annual Tax on Enveloped Dwellings (ATED) is an annual tax payable (mainly) by companies that own UK residential property which is valued at more than £500,000 based on your respective valuation date.

ATED also applies to properties owned by:

  • A partnership with corporate member(s)
  • A collective investment scheme, such as a unit trust or open-ended investment company

A property falls under ATED if it is a dwelling, and all, or part of it, is used, or could be used, as a residence. It also includes any gardens, grounds, and buildings within them. Examples of properties which are not classed as dwellings include hotels, guest houses, hospitals, military accommodation etc.

 

Property valuation

A property must be valued to determine if it falls under ATED and will be based on your respective valuation date.  The current valuation date used is the 1 April 2017, (or the acquisition date if this is later) with the next valuation date being 1 April 2022.

Therefore, if a property has decreased in value since 1 April 2017 (or the acquisition date), and is now valued at less than £500,000, then an ATED return will still be required for 2021/22.

 

What are the requirements?

An ATED return needs to be completed if a company owns a dwelling in the UK that is valued at more than £500,000. Returns must be submitted online to HMRC between 1 April and 30 April in any chargeable period.

However, if a residential property is purchased which falls within the ATED regime, the return will need to be prepared and submitted online to HMRC within 30 days.

 

Charges

The annual chargeable amounts for ATED increase annually in line with the Consumer Price Index. The current chargeable amounts are set out below.

Chargeable amounts

 

Property valueAnnual charge

(1 April 2021 – 31 March 2022)

Annual charge

(1 April 2021 – 31 March 2022)

More than £500k to £1m£3,700£3,800
More than £1m to £2m£7,500£7,700
More than £2m to £5m£25,300£26,050
More than £5m to £10m£59,100£60,900
More than £10m to £20m£118,600£122,250
More than £20m£237,400£244,750

 

ATED returns must be submitted and any tax due paid by 30 April if your property is within the scope of ATED on 1 April 2022.

 

Available reliefs

There are reliefs available to reduce chargeable amounts to nil. However, an ATED return will still need to be completed, along with a Relief Declaration return, and submitted online to HMRC by the due date to claim the relief.

Examples of when relief may be available include where the property is:

  • let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner;
  • open to the public for at least 28 days a year;
  • being developed for resale by a property developer;
  • owned by a property trader as the stock of the business for the sole purpose of resale;
  • repossessed by a financial institution as a result of its business of lending money;
  • acquired under a regulated Home Reversion Plan;
  • being used by a trading business to provide living accommodation to certain qualifying employees;
  • a farmhouse occupied by a farm worker or a former long-serving farm worker;
  • owned by a registered provider of social housing.

 

Penalties

You could be charged a penalty, and interest, if:

  • you do not file your return on time
  • you do not pay on time
  • you submit an inaccurate return

 

Get in touch

If you are unsure whether a UK residential property you own falls under ATED rules, or need assistance submitting an ATED or Relief Declaration return, get in touch for a more detailed discussion by speaking to your usual PM+M adviser, or emailing enquiries@pmm.co.uk.

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