ATED stands for Annual Tax on Enveloped Dwellings and is a charge which usually applies to UK residential property owned by companies, partnerships with a corporate member, and collective investment schemes.
Since the scheme was introduced, the threshold for ATED has decreased drastically, and now sits at just £500,000, which has led to more properties requiring an ATED return over time.
Properties within the scope of ATED must be revalued every 5 years, and the next revaluation date was 1 April 2022. You’ve got until the end of this month to declare and pay any tax owed.
VALUATION DATES
The value of the property for any chargeable period is the value at the later of:
- its initial acquisition date, and
- the revaluation date (1 April 2022)
This means that even where relief from ATED is available, properties requiring an ATED return must now complete the return based on the value of the property at 1 April 2022.
It is likely that many properties that were outside of the scope of ATED over the last 5 years may now be worth more than £500,000. Where this is the case, a charge may arise for the first time.
Furthermore, properties that previously have required an ATED return, may now fall within a higher valuation bracket, thus increasing the tax payable (subject to qualifying for any reliefs).
HMRC have published the summary of tax rate bands for the upcoming year which can be found here.
FILING DEADLINES
ATED returns must be submitted online between 1 April and 30 April each year or within 30 days of acquiring the property. For the upcoming year, where applicable, ATED should be declared and paid by 30 April 2022 for the period 1 April 2022 to 31 March 2023.
RELIEFS
There are several reliefs that are available to reduce the charge payable. A handful of these reliefs are highlighted below:
- Properties that are let out commercially to third parties
- Properties that are in the process of being redeveloped or held as stock by a property developer
- Properties that are open to the public for at least 28 days a year
- Farmhouses being occupied by working farmers
- Properties used by certain qualifying employees
- Farmhouses occupied by working farmers
WHAT TO DO NEXT?
Since 2022 is the latest revaluation year, properties that may not have previously fallen within the ATED regime may now do so.
It is recommended that where there is a chance of ATED applying, each residential property owned through the company, partnership or collective investment scheme should be revalued, to determine its market value for ATED purposes.
Whilst a formal valuation is not strictly required, it is advisable to use a property professional (for example, a surveyor or estate agent) in order to ensure that the figure is robust and reasonable.
The filing date is 30 April 2022, and if the return is not submitted on time, late filing penalties and interest can apply, even where no tax is due because of an available relief.
If you would like support with determining whether this is relevant, exploring the availability of reliefs, or assistance completing the return, please get in touch. Jake’s contact details are given below.
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