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What is the ATED? (Annual Tax on Enveloped Dwellings)

Does your company or partnership currently hold or plan to hold residential property? If so, you may be liable to the ATED. Read below to find out more about this often-overlooked tax.

ATED was introduced in April 2013 against high-value residential properties situated in the UK, worth more than £2 million and beneficially owned by “Non-natural persons” (NNPs) namely, companies, corporate partnerships and certain investment vehicles.

The aim of this new tax was to collect annual revenues from these ‘envelopes’, which were predominantly used as tax geared vehicles.

However, from 1 April 2016 the scope of ATED widened significantly, bringing into charge dwellings which held a value of £500,000 or more. Valuations for the current ATED returns will be based on values at 1 April 2017 (or later if acquired later). This date will be updated next year.

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.

Several reliefs from the ATED charges are available, but regardless of whether or not your company/partnership is subject to the ATED charge, an annual return must be submitted to HMRC before the designated deadline in order to avoid late filing penalties. This year’s ATED returns must be prepared and submitted between 1 April – 30 April 2022 and penalties apply for late returns.

How much is the ATED?

The annual charges for the ATED generally increase each year with the inflation released in the Autumn statement by the chancellor.

Each return period is prepared and submitted in advance, as the ATED is a forward looking tax, meaning we are looking to prepare ATED returns for the period 1 April 2022 – 31 March 2023 currently. If there are changes in circumstance throughout the period in question then an amended return would need to be submitted to HMRC.

The charges for the 2022/23 year are as follows:

Value of property at 1 April 2017 (or acquisition date if acquired later) ATED Charge per annum
£500,001 – £1,000,000 £3,800
£1,000,001 – £2,000,000 £7,700
£2,000,001 – £5,000,000 £26,050
£5,000,001 – £10,000,000 £60,900
£10,000,001 – £20,000,000 £122,250
£20,000,000 + £244,750

 What can I do about this?

In order to meet the very prompt filing deadlines imposed for ATED, it is imperative for your online ATED registration to be completed at your earliest opportunity.

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 Max Bain at m.bain@twpaccounting.co.uk or by phone 01932 704721.