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).

For the 5 chargeable periods beginning from 1st April 2018, the 1st April 2012 valuation date was superseded by the 1st April 2017 valuation date. Properties owned on or before 1st April 2017 should be revalued using that date. If you acquired the property after 1st April 2017 the later date is to be used.

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 2020 to 31st March 2021

 

Property value Annual charge
More than £500,000 up to £1 million £3,700
More than £1 million up to £2 million £7,500
More than £2 million up to £5 million £25,200
More than £5 million up to £10 million £58,500
More than £10 million up to £20 million £118,050
More than £20 million £236,250

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:

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:

 

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
Solicitors Office and Legal Services
Reviews and Litigation
SO790
Newcastle Upon Tyne
NE98 1ZZ

 

DISCLAIMER
© Thandi Nicholls Ltd 2021 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, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.

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