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Business Tax  •  Property

Property Tax Update: Understanding ATED – Annual Tax on Enveloped Dwellings

By RJP LLP on 21 June 2022

This is an annual charge that may be due where a company, which includes an LLP with a corporate partner, owns residential properties; the charge is not applicable to individuals, or companies that own commercial properties.

In this article we will highlight when the ATED charge applies, the filing requirements and deadlines and the reliefs that are available.

The annual charge

The ATED charge is applicable where a company owns residential property in the UK with a cost or value of £500,000 or above. Currently the scale of ATED charges is as follows:

Properties with a cost/value of

over £500k – £1m: £3,800
over £1m and up to £2m: £7,700
over £2m and up to £5m: £26,050
over £5m and up to £10m: £60,900
over £10m and up to £20m: £122,250
over £20m: £244,750

The value upon which the charge is based is determined by a number of factors, including when the property was purchased or completed, or available to occupy. The taxable value of the property can either be the cost or the value at the valuation date. The valuation date is set at five yearly intervals, the most recent being 1 April 2022.

Defining a residential property

For the purposes of determining if an ATED charge may be applicable, a residential property is one that is used all, or in part, as a dwelling; or is in the process of being constructed or adapted as a residence.

There are some specific exemptions from the definition of a residence, i.e. hotels, student accommodation, guest houses and care homes.

ATED filing and payment deadlines

The ATED charge is payable annually in advance by 30 April for the period for which the return relates. The ATED year runs from 1 April to 31 March; i.e. 22/23 ATED return covered the period 1 April 2022 – 31 March 2023 with a filing deadline of 30 April 2022. The ATED tax charge for the 2022/23 tax return was due for payment on 30 April 2022.

In some cases an in year return may be required, for instance where the company acquires a property; depending upon the circumstances a return will need to be filed within 30 – 90 days of the acquisition, or property becoming available for use as a residence.

There are penalties for late filing of the returns, late payment of tax, for not submitting a return for submitting a return that is incorrect or incomplete.

ATED reliefs

The common instances where reliefs are available which mean that no tax charge is payable are where residential properties are:
1. being redeveloped or held as stock by a property developer;
2. being held by a rental business and are being let out to a third party on an arms’ length basis

Where ATED relief is applicable it must be claimed, it does not mean there is an exemption from filing an annual return.

ATED reporting requirements are easily overlooked as the rules can be complex, particularly where properties are purchased or completed during the reporting period, or where reliefs are available but not claimed.

If you have a company that owns residential property and would like to check if the ATED reporting requirements apply, please email us via partners@rjp.co.uk.

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This is an annual charge that may be due where a company, which includes an LLP with a corporate partner, owns residential properties; the charge is not applicable to individuals, or companies that own commercial properties.

In this article we will highlight when the ATED charge applies, the filing requirements and deadlines and the reliefs that are available.

The annual charge

The ATED charge is applicable where a company owns residential property in the UK with a cost or value of £500,000 or above. Currently the scale of ATED charges is as follows:

Properties with a cost/value of

over £500k – £1m: £3,800
over £1m and up to £2m: £7,700
over £2m and up to £5m: £26,050
over £5m and up to £10m: £60,900
over £10m and up to £20m: £122,250
over £20m: £244,750

The value upon which the charge is based is determined by a number of factors, including when the property was purchased or completed, or available to occupy. The taxable value of the property can either be the cost or the value at the valuation date. The valuation date is set at five yearly intervals, the most recent being 1 April 2022.

Defining a residential property

For the purposes of determining if an ATED charge may be applicable, a residential property is one that is used all, or in part, as a dwelling; or is in the process of being constructed or adapted as a residence.

There are some specific exemptions from the definition of a residence, i.e. hotels, student accommodation, guest houses and care homes.

ATED filing and payment deadlines

The ATED charge is payable annually in advance by 30 April for the period for which the return relates. The ATED year runs from 1 April to 31 March; i.e. 22/23 ATED return covered the period 1 April 2022 – 31 March 2023 with a filing deadline of 30 April 2022. The ATED tax charge for the 2022/23 tax return was due for payment on 30 April 2022.

In some cases an in year return may be required, for instance where the company acquires a property; depending upon the circumstances a return will need to be filed within 30 – 90 days of the acquisition, or property becoming available for use as a residence.

There are penalties for late filing of the returns, late payment of tax, for not submitting a return for submitting a return that is incorrect or incomplete.

ATED reliefs

The common instances where reliefs are available which mean that no tax charge is payable are where residential properties are:
1. being redeveloped or held as stock by a property developer;
2. being held by a rental business and are being let out to a third party on an arms’ length basis

Where ATED relief is applicable it must be claimed, it does not mean there is an exemption from filing an annual return.

ATED reporting requirements are easily overlooked as the rules can be complex, particularly where properties are purchased or completed during the reporting period, or where reliefs are available but not claimed.

If you have a company that owns residential property and would like to check if the ATED reporting requirements apply, please email us via partners@rjp.co.uk.