Concept of ATED
Annual Tax on Enveloped Dwellings (ATED) is payable by companies owning residential properties valued at more than £500,000. ATED return needs to be filed if your property:
- Is a dwelling.
- Is in the UK.
- Valued more than £500,000.
- Is owned completely or partly by a company, partnership where any of the partners is a company or collective investment scheme.
What is a 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 and prisons.
When is the ATED deadline?
ATED period runs from 1 st April to 31 st March and the charge is payable in advance by 30 th of April if your property is within the scope of ATED on 1 April. For example, for 2023/24 – the ATED period runs from 01 st April 2023 to 31 st March 2024 and the tax is payable by 30 th April 2023.
If a UK residential property falling within ATED is acquired part-way through a year (or the use of the property changes to bring it in to ATED), an ATED return must be submitted within 30 days of acquisition/change of use.
Value of the dwelling
Property revaluations are required every five years (1 April 2012, 1 April 2017, 1 April 2022, etc.) and apply to the next following five years or chargeable periods.
|Revaluation date||Chargeable periods that apply|
(1 April to 31 March)
|1 April 2012||2013 to 2014|
2014 to 2015
2015 to 2016
2016 to 2017
2017 to 2018
|1 April 2017||2018 to 2019|
2019 to 2020
2020 to 2021
2021 to 2022
2022 to 2023
|1 April 2022||2023 to 2024|
2024 to 2025
2025 to 2026
2026 to 2027
2027 to 2028
For the 5 chargeable periods from 2023, the revaluation date is 1 April 2022.
You must revalue the properties you owned on or before 1 April 2022 using that date. If you acquire property after 1 April 2022, use the acquisition date.
How much is the ATED charge?
ATED charge depends on the band in which a property falls into by reference to the value of the property at the relevant ATED valuation date and the number of days in the ATED year for which the company is liable to the ATED charge.
|Property value||Annual charge|
(1 April 2022 to 31 March 2023)
(1 April 2023 to 31 March 2024)
|More than £500,000 up to £1 million||£3,800||£4,150|
|More than £1 million up to £2 million||£7,700||£8,450|
|More than £2 million up to £5 million||£26,050||£28,650|
|More than £5 million up to £10 million||£60,900||£67,050|
|More than £10 million up to £20 million||£122,250||£134,550|
|More than £20 million||£244,750||£269,450|
Reliefs for ATED charge
There are various reliefs from the ATED charge which are mentioned below:
- Property let on a commercial basis to an unconnected third party.
- Being developed for resale by a property developer
- Open to the public for at least 28 days a year
- Property used by a trading business as living accommodation for qualifying employees; or
- If the property is a farmhouse occupied by a farm worker or a former long-serving farm worker.
Relief from the ATED charge must be claimed by submitting a Relief Declaration Return to HMRC by 30 April each year.
Exemptions for ATED charge
You do not need to file a return if you meet the conditions for an exemption.
There are a number of exemptions from ATED, including:
- charitable companies using the dwelling for charitable purposes — all of the exemption conditions must be met in section 42 of the ATED technical guidance
- public bodies listed in section 43 of the ATED technical guidance
- bodies established for national purposes listed in section 44 of the ATED technical guidance
Will I pay tax if I ‘de-envelope’
The process of de-enveloping the property (i.e. transferring the property out of the company)usually gives rise to a Corporation Tax liability for the company and potentially a Capital Gains Tax liability for the shareholder(s). However, once the property has been de-enveloped, the ATED charge will no longer be payable. In addition, an amended ATED return can then be submitted in order to claim a refund of the ATED charge in respect of the remainder of the ATED year for which the company is no longer liable.
Again, due to various anti-avoidance rules in this area, the shareholders of the property-owning company may also be liable to further taxes as a result of the de-enveloping.