Annual tax on enveloped dwellings (ATED)

For landlords and property investors who hold residential properties through limited companies, it’s crucial to understand the implications of the Annual Tax on Enveloped Dwellings (ATED). Introduced to discourage the use of companies and certain non-natural persons from holding high-value residential property, ATED can carry significant tax liabilities if not managed properly. 

In this blog, we’ll explore what ATED is, who it affects, how much it costs, and how landlords can stay compliant. 

What Is ATED? 

The Annual Tax on Enveloped Dwellings (ATED) is a UK tax charged on companies, partnerships with corporate partners and certain collective investment schemes that own UK residential properties valued above £500,000. 

“Enveloped” refers to the practice of holding property within a corporate structure often done for privacy or tax reasons. HMRC introduced ATED in April 2013 as part of a wider strategy to increase tax transparency and reduce avoidance. 

Who Needs to Pay ATED? 

You may be liable to pay ATED if: 

• You own a UK residential property valued over £500,000; 

• The property is owned by a company, partnership with a corporate partner, or a collective investment vehicle (such as a unit trust); 

• None of the available reliefs apply. 

Key Point: 

Private landlords who own property in their personal names are not subject to ATED — it only applies to corporate and certain non-individual ownership structures. 

How Much Are the ATED Charges? 

The tax is charged annually and is based on the value of the property, not rental income or profit. Rates are updated each year. For the tax year 2025–26, the charges are as follows: 

These charges are per property, and they apply annually, due by 30 April each year. 

Reliefs and Exemptions: Can You Avoid ATED? 

Fortunately, there are several reliefs available that can reduce or eliminate your ATED liability, but you must claim them by submitting a Nil Relief Declaration Return. 

Common Reliefs Include: 

• Letting exemption: If the property is let on a commercial basis to third parties (e.g., tenants). 

• Property development or trading: If the company develops or trades in property. 

• Employee accommodation: If the property is used to house company employees. 

• Charitable use: If the property is held by a charity for charitable purposes. 

Important: You must still file a return, even if claiming relief that reduces your liability to nil. 

ATED Return Deadlines 

• Annual Return: Due by 30 April each year for the tax year beginning 1 April. 

• New Acquisition: If you acquire a property that becomes subject to ATED, you must file a return within 30 days of acquisition. 

• Revaluation: Properties must be revalued every five years (next revaluation point is 1 April 2027). 

What Happens If You Don’t Comply? 

Failure to file ATED returns or pay the due tax on time can result in: 

• Late filing penalties 

• Interest charges 

• HMRC investigations 

ATED is a niche but important part of the UK tax system that can catch landlords by surprise if they are operating through corporate structures. Whether you are planning to incorporate or already own property through a company, professional advice is essential to avoid unexpected costs. 

If you are unsure about your ATED obligations, please contact UK Landlord Tax on 01902 202003 or email enquiries@uklandlordtax.co.uk 

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