An at a glance freeview guide to the Annual Tax on Enveloped Dwellings or ATED. Subscribers your detailed guide to this topic Annual Tax on Enveloped Dwellings (ATED) .

The Annual Tax on Enveloped Dwellings (ATED) is an annual charge on UK dwellings held by a non-natural person (NNP) (e.g. a company).

At a glance

The ATED applies unless a relief is claimed. It does not apply to individuals. 

  • ATED is payable annually in advance by 30 April and a return must also be filed by that date.
  • The ATED is based on the taxable value of the property:
    • Properties are revalued for the purposes of ATED every five years.
    • Part-disposals, acquisitions of additional land or other substantial acquisitions or additions can trigger a new valuation date.
  • Companies within the ATED rules can register themselves or appoint an agent to act on their behalf.

What is a dwelling?

ATED is only charged to Non-Natural Persons owning a dwelling. A dwelling is a property that is:

  • Used all or in part as a residence or
  • Is in the process of being constructed or adapted as a residence.
    • It includes land and any outbuildings occupied and enjoyed by the dwelling eg. garden/patio/garaging. 
  • A building or part of a building is a dwelling at any time when it is being used or suitable for use as a single dwelling or it is in the process of being constructed or adapted for such use.
  • Certain residential properties are not dwellings, including hotels, guest houses, care homes. school, student, military and prison accommodation.
  • Undeveloped land is not subject to ATED unless it becomes part of the land occupied or enjoyed, with a dwelling.

When is a Property Owned?

For ATED to apply your company must have a “chargeable interest” in a property.

The general rule is that chargeable interest means:

  • any estate, interest, right or power in or over land in the UK
  • the benefit of an obligation, restriction or condition affecting the value of any of the above.

Non-natural persons (NNP)

A NNP is: 

  • A company
  • A partnership with a corporate partner
  • A collective investment scheme 

A trust is not an NNP. 

Taxable value

The taxable value is the value of the property at the applicable valuation date.

The ATED applies if a dwelling has a taxable value in excess of:

£500,000

From 1 April 2016 onwards

£1,000,000

From 1 April 2015

£2,000,000

From 1 April 2014

Valuation date

For years up to and including 2017/18 the taxable value is:

  • Its 1 April 2012 valuation, or if acquired after 1 April 2012, its cost.

For 2018/19 and the following four years the taxable value is:

  • Its value at 1 April 2017, or if acquired after 1 April 2017, its cost.

Pre-return banding checks (PRBC)

  • If a property value is within 10% of any band HMRC will provide a PRBC to confirm whether your valuation is acceptable.

What is the ATED charge?

The annual charge is as follows (payable in advance):

ATED charge for the year commencing:

Property value

1 April 2019

1 April 2018

1 April 2017

     

1 April 2016

1 April 2015

1 April 2014

1 April 2013

£500k-£1m

£3,650

£3,600

£3,500

£3,500

n/a

n/a

n/a

£1m-£2m

£7,400

£7,250

£7,050

£7,000

£7,000

n/a

n/a 

£2m - £5m

£24,800

£24,250

£23,550 

£23,350

£23,350

£15,400

£15,000 

£5m - £10m

£57,900

£56,550

£54,950

£54,450

£54,450

£35,900

£35,000

£10m-£20m

£116,100

£113,400

£110,110

£109,050

£109,050

£71,850

£70,000

£20m+

£232,350

£226,950

£220,350 

£218,200

£218,200

£143,750

£140,000

Acquisitions, disposals and improvements

  • Where a property is purchased mid-year the charge is time apportioned and an ATED return is due 30 days after purchase.
  • Where a property is disposed of mid-year a refund may be claimed by amending the original return. A return can be amended any time within 12 months of the end of the relevant period.
  • When a property's improvements take it into an ATED charge a return is due within 90 days.

De-enveloping

Companies may decide to de-envelope a property, that is return it to shareholders, if so then they should consider the tax consequences. See De-enveloping property.

ATED Reliefs and excluded dwellings

Your company must make a nil-charge return to claim relief from ATED.  

Relief applies and there is no tax charge for dwellings that are:

  • Being redeveloped or held as stock for resale by a property developer.
  • Held by property rental businesses and let out to a third party on a commercial basis.
  • Open to the public for at least 28 days a year or used to provide accommodation or other services to the general public on a commercial basis.
  • Farmhouses occupied by working farmers.
  • Held by trading companies for the use of employees in the trade.
  • Held by, from 1 April 2016 only:
    • Property rental businesses for occupation by employees.
    • Property management companies for occupation by a caretaker.
  • You cannot claim relief if the property is occupied by a non-qualifying individual such as:
    • An individual connected to the company
  • The controlling shareholder's spouse, civil partner or relatives, or the relatives of spouses or civil partners where relatives include brother, sister, ancestor or lineal descendants.
  • The property development relief applies where:
    • the interest is held exclusively for the purpose of developing and reselling the land in the course of the trade.
      • For relief to apply the property development trade must be carried on throughout the ATED chargeable period.

Exemptions

The following are exempt from ATED and do not have to submit a return or claim a relief:

  • Charitable companies holding a property for charitable purposes.
  • Public bodies.
  • Bodies established for National Purposes (e.g. the trustees of the British Museum)

ATED penalties

These follow the penalty regimes under schedule 55 and 56 FA 2009 for late filing and late payment regimes and there are also penalties for error or mistake (leading to a loss of tax) under schedule 24 FA 2007. 

Tax relief for the ATED charge

  • A deduction against profits for the cost of an ATED charge is permissible if it is wholly and exclusively incurred for the purposes of the business.

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