Annual tax on enveloped dwellings (ATED)
Overview
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.
You’ll need to complete an ATED return if your property:
- is a dwelling
- is in the UK
- is valued at more than £500,000
- is owned completely or partly by a:
– company
– partnership where any of the partners is a company
– collective investment scheme, for example, a unit trust or an open
– ended investment vehicle
Returns must be submitted on or after 1st April in any chargeable period (which runs from 1st April to the following 31st March) and be filed by 30th April in the relevant period.
There are reliefs and exemptions from the tax, which may mean you do not have to pay.
One of the main reliefs for landlords is if the company is letting out a property in a property rental business on a commercial basis with a view to a profit, then no ATED is payable but a return is still required if the property is worth more than £500,000.
Meaning of ‘dwelling’
Your property is a dwelling if all or part of it is used, or could be used, as a residence, for example, a house or flat. It includes any gardens, grounds and buildings within them.
Some properties are not classed as dwellings.
These include:
- hotels
- guest houses
- boarding school accommodation
- hospitals
- student halls of residence
- military accommodation
- care homes
- prisons
Value your property
To work out what you need to pay you’ll need to value your property using a valuation date.
In some circumstances, you can also ask HMRC for a Pre-Return
Banding Check (PRBC).
Properties have an initial valuation date which is on the date the property was acquired or they should have been revalued on 1st April 2017 if acquired before that date. A revaluation is required every 5 years so, a revaluation is required on 1st April 2022 (regardless of the date that the property was originally acquired before that date). If the property is acquired after 1st April 2022 then the value on the initial valuation date is used. A further revaluation for all relevant properties will be required on 1st April 2027.
What you need to pay
The amount you’ll need to pay is worked out using a banding system based on the value of your property.
Chargeable amounts for 1st April 2022 to 31st March 2023
| Property value | Annual charge |
| More than £500,000 up to £1 million | £3,800 |
| More than £1 million up to £2 million | £7,700 |
| More than £2 million up to £5 million | £26,050 |
| More than £5 million up to £10 million | £60,900 |
| More than £10 million up to £20 million | £122,250 |
| More than £20 million | £244,750 |
Section 6 and 7 of the ATED technical guidance tells you more about how to work out the charge if:
- you own the dwelling for part of a year
- you claim a relief for part of the year
You may also have to pay:
- Stamp Duty Land Tax when you buy your property – there’s a higher rate for corporate bodies
- ATED-related Capital Gains Tax or Corporation Tax if you sell your property
Submit your return and pay
You can use the ATED online service to submit your return and appoint an agent.
You’ll then need to pay anything you owe.
Other ways to submit your return
If you’re unable to use the ATED online service, further information
can be found in the ATED returns notice.
Penalties and appeals
Penalties
You could be charged a penalty and interest if:
- you do not file your return on time
- you do not pay on time
- you submit an inaccurate return
Appeals
If you disagree with an HMRC decision about your return, for example a penalty or determination, you may be able to challenge it by appealing.
You have 30 days from the date of the decision to write and tell HMRC the grounds on which you’re appealing.
Write to:
HM Revenue and Customs
ATED Penalty Appeals
Stamp Taxes
BX9 1HD
DISCLAIMER
© Thandi Nicholls Ltd 2023 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, S Thandi or M S Bains cannot be held responsible for the consequences of any action or the consequences of deciding not to act.
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