What penalties apply to the Annual Tax on Enveloped Dwellings (ATED) regime? When can they be charged?
A freeview 'At a glance' guide to penalties and the Annual Tax on Enveloped Dwellings (ATED).
- Subscribers see Annual Tax on Enveloped Dwellings (ATED)
At a glance
Tax penalties for failures to follow the Annual Tax on Enveloped Dwellings (ATED) regime fall under:
- Late filings (failure to make returns).
- Late payment (failure to make payment on time).
- Penalties for error or mistake (penalties for errors).
An ATED return is required even if:
- No tax is payable.
- The taxpayer wishes to claim an exemption from the tax charge.
The Annual Tax on Enveloped Dwellings (ATED) applies when non-natural persons (NNP) hold interests in UK residential property valued above £500,000 (threshold since 2016).
A NNP may be a company, collective investment scheme, or LLP with a corporate partner.
The ATED does not apply to residential property owned by individuals.
Late filing:
- An ATED return and payment are due within 30 days of the acquisition of a high-value residential property by a company or other type of NNP.
- For existing properties, an annual ATED return and tax payment are due by 30 April during the tax year, e.g. for the 2025-2026 tax year, the filing date is 30 April 2026.
- Transitional provisions applied in the early years:
- For 2015-16, the return and payment were due on 1 October 2015 and 31 October 2015.
- For 2013-14 and 2014-15, there were transitional provisions for properties worth £1 million. The ATED return was due for filing by 1 October 2014 and the tax payable by 31 October 2014,
See ATED rates, dates and deadlines in Annual Tax on Enveloped Dwellings (ATED).
Penalites
Penalties are due if the return is filed late or if payment of ATED is not made. The key deadlines for both filing and payment of tax are:
- Within 30 days of the purchase of a new property.
- For a new build, within 90 days of the earliest date when the property either:
- Becomes a dwelling for Council Tax purposes.
- Is first occupied.
- By 30 April, if your property falls within the scope of ATED on 1 April of that same year. The charge is paid in advance for properties already within the scope.
Interest is charged on both unpaid tax and unpaid penalties.
|
Late filing |
Late payment |
Penalty |
|
Miss filing deadline |
£100 |
|
|
30 days late |
5% of tax due |
|
|
3 months late |
Daily penalty £10 per day for up to 90 days (max £900) |
|
|
6 months late |
5% of tax due or £300, if greater |
|
|
6 months late |
5% of tax outstanding at that date |
|
|
12 months late |
5% or £300 if greater, unless the taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due. |
|
|
12 months late |
5% of tax outstanding at that date |
|
|
12 months & taxpayer deliberately withholds information |
Based on behaviour:
Reductions apply for prompted and unprompted disclosures and telling, giving and helping. |
Late filing examples:
Example 1:
Company A Ltd acquires a £2 million property on 1 January 2025. It must:
- Make its first ATED return and make payment by 1 February 2025.
- Make a 2025-26 year return by 30 April 2025.
The return was submitted on 1 July 2025, missing two filing deadlines. This will cost the company £1,100 in penalties:
- The first return was due on 1 February 2025 and not submitted until 1 August 2025: First missed deadline (£100 penalty) and still outstanding at three months, incurring daily penalties for 90 days at £10 per day, making £1,000 of penalties.
- The second return was due on 30 April 2025 and not submitted until 1 July 2025: First missed deadline (£100 penalty).
Example 2:
Company B Ltd failed to realise that it had a filing deadline for a £500,000 property. It revalued its property on 1 April 2022 for its 2023-24 return. It then failed to file a 2023-24 return and only realised its error on 1 May 2024. Its penalties will be £1,600, made up as £100 (late filing) + £900 (three months late, £10 for 90 days) + £300 (six months late) + £300 (12 months late).
Penalties for errors: Schedule 24 FA 2007
A tax-geared penalty will apply in one of three circumstances that result in a potential loss of tax:
- When a taxpayer makes a careless error or mistake in an ATED return or document.
- When a third party supplies false information, or deliberately withholds information in connection with another person’s return or document.
- When HMRC raises an assessment for tax and the taxpayer fails to notify HMRC that the assessment is too low.
Appeal against penalties
- If HMRC raises a penalty assessment, it should be appealed to HMRC.
- An appeal must be lodged to HMRC within 30 days. The time limit may sometimes be extended by permission of the tribunal.
- The grounds for lodging an appeal and the way that an appeal is drafted depend entirely on the facts and circumstances of the case; it may be on the basis that:
- The taxpayer has a reasonable excuse for its failure
- The penalty fails on technical grounds
- HMRC has not considered any mitigating circumstances.
- The amount of the penalty may be appealable, and penalties for errors may be suspended.
- See Tax Appeals
Useful guides on this topic
Annual Tax on Enveloped Dwellings (ATED)
What is the Annual Tax on Enveloped Dwellings (ATED)? Who does ATED apply to? What relief is available and how is it claimed? What are the ATED return filing dates?
Annual Tax on Enveloped Dwelling (ATED): At a glance
What is ATED? When does ATED apply? What relief is available and how is it claimed? What are the ATED filing requirements?