Annual Tax on Enveloped Dwellings ‘ATED’ – Are you liable?

What is ‘ATED’?

In short, the Annual Tax on Enveloped Dwellings (ATED) is an annual charge on UK dwellings held by a non-natural person, usually in the form of a company.

If required, an ATED return is due for filing by 30 April of each respective year, in advance of the ATED period, which spans from 1 April to 31 March.

Requirement to file?

If your company holds a UK residential property, please consider whether the below criteria are met:

1. The property is a Dwelling

All of it is used, or could be used as a residence, for example a house or flat. Please note that the following are not considered dwellings: Hotels, Guest Houses, Boarding School Accommodation, Hospitals, Student Halls of Residence, Military Accommodation, Care Homes or Prisons.

2. The property is in the UK

3. The property is valued at more than £500,000 as at 1 April 2017; or valued at more than £500,000 at the subsequent date of purchase, if this date was later than 1 April 2017

4. The property is owned completely or partly by a UK or overseas:

• company
• partnership where any of the partners is a company
• collective investment scheme – for example a unit trust or an open-ended investment vehicle

If the above criteria have been met, you will be required to submit an ATED return and may be liable to an ATED tax charge, payable by 30 April 2022. Note – an ATED return is due even if ATED relief is available and late-filing penalties of up to £1,600 per return per year may apply, even if no ATED is due.

It is important to remember that returns must be filed for relevant properties even where no ATED charge is due because a relief is being claimed, for example in respect of properties held as investments rented to third parties, or held as trading stock for dealing or development.

Although these requirements represent the basic criteria in order for an ATED return to be filed, there are other criteria which must be considered.

1 April 2022 – Revaluation date

Please note, the ‘standard’ valuation date (currently 1 April 2017) is updated every 5 years, with 1 April 2022 being the date at which the next property valuation should be based.

As such, please consider whether a property is held which may have previously been valued at below £500,000, and whether its value is now likely to exceed the £500,000 threshold as at the new revaluation date, 1 April 2022. If so, the relevant company may be liable to file an ATED return as of the 2023/24 period, 1 April 2023 to 31 March 2024. Similarly, if ATED relief is not available, a dwelling valued near a threshold to one of the bands may enter a new band from 1 April 2023 based on its 1 April 2022 valuation.

Would you like to know more?

Please get in touch with your usual Blick Rothenberg contact, or any of the partners listed on this page, if you believe any of the above applies to you or if you have any questions.