ATED was first introduced in April 2013 against high-value residential properties (dwellings) situated in the UK, worth more than £2million and beneficially owned by “Non-natural persons” (NNPs) namely, companies, corporate partnerships and certain investment vehicles.
The government’s objective for ATED was to collect annual revenues from these ‘envelopes’ which were predominantly used as tax geared vehicles and therefore with this in mind, individuals, non-corporate partnerships and most trust structures do not fall within the scope of ATED. The tax collection has been administered using a self assessment filing regime placing the responsibility on each chargeable person.
The valuation date for ATED purposes is 1 April 2022 or the date of acquisition if later for ATED return periods from 1 April 2023 up to 31 March 2028 (1 April 2017 for periods from 1 April 2018 up to 31 March 2023). This means that properties owned before 1 April 2022 need to be revalued using this date. The illustration below demonstrates when a property comes into charge based on its ATED value.
| ATED Return Period Required | Relevant Market Value | Submission Deadline |
|---|---|---|
| 1 April 2013 to 31 March 2014 | More than £2million | 30 April 2013 |
| 1 April 2014 to 31 March 2015 | More than £2million | 30 April 2014 |
| 1 April 2015 to 31 March 2016 | More than £1 million | 1 October 2015 |
| 1 April 2016 to 31 March 2017 | More than £500,000 | 30 April 2016 |
| 1 April 2017 to 31 March 2018 | More than £500,000 | 30 April 2017 |
| 1 April 2018 to 31 March 2019 | More than £500,000 | 30 April 2018 |
| 1 April 2019 to 31 March 2020 | More than £500,000 | 30 April 2019 |
| 1 April 2020 to 31 March 2021 | More than £500,000 | 30 April 2020 |
| 1 April 2021 to 31 March 2022 | More than £500,000 | 30 April 2021 |
| 1 April 2022 to 31 March 2023 | More than £500,000 | 30 April 2022 |
| 1 April 2023 to 31 March 2024 | More than £500,000 | 30 April 2023 |
| 1 April 2024 – 31 March 2025 | More than £500,000 | 30 April 2024 |
The valuation and return submission dates for dwellings which have been constructed or developed may vary from the dates above depending on the facts of each case. Please note the ordinary self assessment late filing penalty regime applies to all ATED returns, whether or not a liability arises.
What are the tax implications?
An appropriate ATED charge will be levied against a NNP based on a value banding system for each ATED property beneficially owned, assuming the property is not exempt and nor does it qualify for a relief against the ATED charge. Below are examples of the reliefs which exist for your information:
- Property rental business made to unconnected third parties on a commercial basis.
- Dwellings open to the public for at least 28 days during the period on a commercial basis.
- Property being developed for resale.
- Property held as stock in the course of a property trading business.
- Financial institutions acquiring dwellings in the course of lending.
- Dwellings used for trade purposes (i.e. occupation by qualifying employees and partners).
- Farmhouses occupied by a farm worker or former long-serving farm worker.
The banded ATED charges are as follows and apply to each ATED property held by a company which is not relievable or exempt. Even if a property is relievable, an annual relief declaration must be submitted to HMRC before the designated deadline in order to avoid late filing penalties.
| Property Valuation | Annual ATED Charge 2024/2025 |
|---|---|
| More than £500,000 up to £1 million | £4,400 |
| More than £1 million up to £2 million | £9,000 |
| More than £2 million up to £5 million | £30,550 |
| More than £5 million up to £10 million | £71,500 |
| More than £10 million up to £20 million | £143,550 |
| More than £20 million | £287,500 |
If you believe any of this may be applicable to your company or would like to discuss any future purchases that could be applicable to the ATED, please get in touch with Rudolf Savundra at r.savundra@twpaccounting.co.uk or by phone 01932 901130.
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