What is the Annual Tax on Enveloped Dwellings (ATED)?
ATED is an annual tax charge on Enveloped Dwellings payable by companies, partnerships with corporate members and collective investments vehicles that own a UK residential property valued at £500,000 or above.
When do I need to submit my ATED return and are there any penalties?
If the property falls within the ATED charge, a return must be submitted to HMRC by the next 30 April along with the tax payment. The deadline for the period 1 April 2018 to 31 March 2019 is 30 April 2018.
You could be charged a penalty and interest if you don’t file your return or pay the tax bill on time:
• Initial penalty of £100 for late submission
• Daily penalties of £10 per day for returns that are more than 3 months late
• Further penalties of £300, or 5% of HMRC’s estimation of your liability to the ATED tax (whichever is higher), for returns that are more than 6 months late
• Further penalties of £300, or 5% of HMRC’s estimation of your liability to the ATED tax (whichever is higher), for returns that are more than 12 months late
What is the meaning of Dwelling?
For the purposes of ATED, dwelling is a property if all or part of it is used, or could be used, as a residence including any gardens, grounds and buildings within them.
Non-residential properties are outside the scope of ATED. Additionally, the following properties are specifically not classified as dwellings:
• Guest houses
• Boarding school accommodation
• Student halls of residence
• Military accommodation
• Care homes
How can I value my property?
The valuation can be made, by either yourself or a professional, on an open market and willing buyer – willing seller basis.
The return for the period from 1 April 2018 to 31 March 2019 should be based on property valued on 1 April 2017 (or the purchase price if acquired later).
For previous tax years, and for properties owned on or before 1 April 2012, the valuation should be based on 1 April 2012, or on the date of acquisition if this date is later. This valuation is then set for the next 5 years (until 1 April 2017 when the property needs to be revalued).
How much do I need to pay?
|Property value||Annual charge|
|£500,000 to £1 million||£3,600|
|£1 million to £2 million||£7,250|
|£2 million to £5 million||£24,250|
|£5 million to £10 million||£56,550|
|£10 million to £20 million||£113,400|
|More than £20 million||£226,950|
If the property does not fall within ATED for the whole year, the annual charge will be apportioned based on the number of days in a year that the charge should apply.
Are there any ATED reliefs?
There are various reliefs available against the ATED charge. In order to be able to claim a relief against ATED, the property must be either (based on HMRC’s guidance):
• Let to a third party on a commercial basis and not occupied (or available for occupation) by anyone connected with the owner
• Open to the public for at least 28 days a year on a commercial basis
• Being developed for resale by a property developer
• Owned by a property trader as the stock of the business or for the sole purpose of resale
• Repossessed by a financial institution as a result of its business of lending money
• Used by a trading business to provide living accommodation to employees, where the employee has less than 10% interest in the company
• A farmhouse occupied by a farm worker or a former long-serving farm worker
• Owned by a registered provider of social housing
However, even when the property is eligible for one of the above reliefs and no tax is payable, a “Relief Declaration Return” must still be submitted by 30 April each year.
If you are affected by ATED or require tax advice, please contact our team who will be happy to help you.