ATED (Annual Tax on Enveloped Dwellings)

What is Annual Taxation on Enveloped Dwellings?

For companies that own UK residential property they may be liable for tax which is known as Annual Taxation on Enveloped Dwellings (ATED). An ATED return will need to be completed if certain criteria are met. Typically, the criteria being the property is a dwelling within the UK, it is owned partly or completely by a company or partnership and the property is valued more than £500,000.

The Finance Act 2013 introduced ATED with this tax being effective from 1^st April 2013. The valuation date of the property is dependant on when the property was initially purchased. The valuation dates are known as an initial valuation date and the revaluation date.

The initial valuation date will be either

– 1^st April 2012 for the properties owned on or before this date

– The date the property was purchased if it is after 1^st April 2012.

The revaluation dates for all properties are fixed every 5 years after 1^st April 2012 regardless of when the property was purchased. The revaluation date will be, for example, 1^st April 2017, 1^st April 2022 and so forth. There are also different situations when a revaluation is required, such as disposing part of the property (e.g. selling a small parcel of land)

 

Are there any exemptions or relief?

There are some instances where ATED does not apply. Certain property types are exempt from ATED as they are not deemed to be a dwelling for ATED purposes. These being:

– Care homes

– Hospitals

– Hotels / Guest Houses

– Student halls of residence / boarding school accommodation

– Prisons

There are circumstances where tax relief applies and can result in the reduction of the ATED charge. For example, if the property is let on a commercial basis to a third party, owned by a registered provider of social housing, open for 28 days a year to the public and held as trading stock of a property development.

 

How much tax do I pay?

The amount paid is based on the value of the property as at the valuation date and the banding system of that year. The banding system and chargeable amounts differ and will vary depending on the year the property is to be valued and that year’s relevant banding system. For example, the banding system and chargeable amounts as of 1^st April 2022 to 31^st March 2023 are:

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

 

The above information should be viewed for illustration purposes only. We would recommend advice is obtained from a suitably qualified independent tax advisor.

 

How Blackacre can assist

Whether you require a new valuation or a revaluation for your ATED returns, our professionally qualified surveyors can provide the valuation report to meet your needs.