The annual tax on enveloped dwellings (ATED) is an HMRC charge that primarily goes to companies, partnerships with corporate partners and certain collective investment vehicles.
ATED applies to non-natural persons who own UK residential property worth PS500,000 or more. Many reliefs and exemptions are available, but must be claimed through a return.
What is ATED?
The annual tax on enveloped dwellings (ATED) applies to UK residential property owned by non-natural persons subject to various reliefs and exemptions. This includes companies, partnerships with a company as a member, as well as collective investment schemes.
ATED is assessed based on a banding system, where the market value of your property falls. Chargeable amounts increase annually in line with inflation and must be paid annually in advance by 30 April of the period covered by the return.
Tax planning is essential in order to minimize penalties from HMRC. Professional advice should be sought as soon as possible to guarantee the correct processes are put in place for future compliance.
Who is liable to ATED?
If your company owns residential property in the UK, it may be subject to an annual tax on enveloped dwellings (ATED). ATED was implemented by HMRC as a measure to combat those using corporate structures to conceal their true ownership of property.
Typically, the charge for real estate taxes is calculated using either the property’s value at its most recent valuation date, or upon acquisition if acquired later.
Self-assessing taxes require you to file an annual return in order to report and pay ATED on your property.
If your property in the UK is worth more than PS500,000, then it may be subject to ATED. Furthermore, it’s wise to revalue your properties every five years in accordance with ATED regulations, particularly for those held within envelope schemes.
How do I work out ATED?
Annual Tax on Enveloped Dwellings (ATED) is an annual charge that applies to companies (UK and non-UK), partnerships and certain collective investment vehicles that own residential property in the UK. ATED is a complex regime and can be challenging to calculate accurately.
ATED requires property valuations be conducted periodically. These must take place on an open market with a willing buyer-seller arrangement.
For ATED purposes, the standard valuation date is 1 April 2012. HMRC have set five-yearly intervals during which properties must be revalued; the next upcoming revaluation will occur on April 1, 2022 and all subsequent appraisal dates thereafter (i.e., 1st April 2027 and subsequent ones).
Calculating how much ATED you owe depends on the value of your single dwelling interest as of 1st April 2012. You can do this yourself or hire a professional valuer.
What reliefs can I claim?
There are various tax reliefs you can claim, but the rules can be complex. Therefore, it’s wise to seek professional advice on the most advantageous structure for your property interests in order to maximize ATED benefits and avoid any penalties.
Alternatively, you can submit a streamlined ATED Relief Declaration Return to claim relief and reduce your ATED charge to zero. This process can be completed online via the ATED service without needing you to enter any property details or valuations.
ATED is one of the most complex tax laws, so it’s essential that you comprehend your obligations. Our enveloped dwellings tax specialists can offer comprehensive guidance on how to meet reporting obligations and minimize any ATED liabilities you may have.
When do I need to pay ATED?
The Annual Tax on Enveloped Dwellings (ATED) is an annual tax levied against UK residential properties owned by companies, partnerships with corporate members and collective investment vehicles such as unit trusts and open ended investment schemes.
Companies, partnerships and collective investment schemes such as unit trusts are mainly responsible for paying ATED; however, certain exemptions and reliefs exist which could reduce your liability to ATED.
HMRC requires ATED returns to be submitted online between 1 April and 30 April of any chargeable period. Alternatively, you may submit a simpler form known as a Relief Declaration Return.