10 April 2017
Does your company own UK residential property valued at £500,000 or above? You could be subject to the Annual Tax on Enveloped Dwellings (ATED).
Annual Tax on Enveloped Dwellings (ATED) is an annual tax charge, payable mainly by companies that own UK residential property valued at £500,000 or above.
The ATED regime also applies to:
If a property falls within ATED, an annual return must be submitted to HMRC along with the tax payment. The return for the period from 1 April 2017 to 31 March 2018 is based on property valued on 1 April 2012 (or the purchase price if acquired later). The ATED return for this period is due by 30 April 2017.
Properties need to be revalued every five years and, as such, a property revaluation should have taken place on 1 April 2017. This valuation will then be used for the return period from 1 April 2018 to 31 March 2019, with the ATED return due by 30 April 2018.
ATED applies to properties that are dwellings. A property is a dwelling if all or part of it is used, or can be used, as a residence (for example, a house or flat) or is suitable for use as a dwelling and is valued at more than £500,000. If the property comprises flats, then each flat is valued separately.
Non-residential properties are outside the scope of ATED. There are also other properties that are not classed as dwellings, such as:
As mentioned above, the filing date for the ATED return is 30 April 2017. The payment date of the charge (if you are chargeable to ATED) is also 30 April 2017.
There are various reliefs available against the ATED charge. However, even if you are eligible for one of these reliefs and there is no tax payable, you must still submit a return and make a claim for the relief by completing a Relief Declaration Return. Again, the deadline date for the submission of this return is 30 April 2017. These returns can be completed and submitted to HMRC online. In order to be able to claim a relief against ATED, the property must be either:
There are also exemptions for:
If you fail to complete the ATED return by 30 April 2017, various penalties will apply, which follow the self-assessment rules:
If your return is six months late, a further penalty of £300, or 5% of HMRC’s estimation of your liability to the ATED tax (whichever is higher) will apply. A second further penalty of £300, or 5% of HMRC estimation of your liability to the ATED tax, (again, whichever is higher) will apply if your return is 12 months late.
HMRC appear to be taking a very strict position on this and is charging penalties for late returns even where there is no tax due. It is therefore important for you to review your own position to find out whether the reduced ATED threshold has any impact for your business. If you’d like any help doing this, please do not hesitate to get in contact.