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 What is ATED? 

ATED is a tax paid annually on UK residential properties that are owned by companies or other ‘non-natural persons’ such as collective investment schemes or partnerships where one of the partners is a company. Such entities will need to complete an ATED return if they own a property, or have shares in a property, that is; in the UK, classified as a dwelling, and was valued in excess of £500,000 at 1 April 2012 or at acquisition if later.

 

ATED was initially introduced in 2013, with the intention of discouraging ‘enveloping’ residential properties of high value within special purpose vehicles (SPVs) enabling sale of the property by means of share sales so that the purchaser did not have to pay stamp duty. At introduction, ATED only applied to properties with a value of more than £2 million, this has since been lowered twice and become more relevant to a larger amount of companies.

How much do I have to pay?

The ATED tax liability depends on which banding the property falls into. So that the charge can be correctly assessed, properties needs to be revalued every five years. As the last valuation date was 1 April 2012, the next date for revaluation is 1 April 2017, applicable to all properties subject to ATED.

 

Property value 1 April 2012 or acquisition

ATED Charge

2016/17

ATED CHARGE

2017/18

 

Over £500,000 but less than £1m

£3,500

£3,500

Over £1m but less than £2m

£7,000

 

£7,050

Over £2m but less than £5m

£23,350

 

£23,550

 

Over £5m but less than £10m

£54,450

 

£54,950

 

Over £10m but less than £20m

£109,050

 

£111,100

Over £20m

£218,200

 

£220,350

 

What are the reliefs?

Various reliefs are available that can reduce or eliminate the tax charge but these are not automatically given. This should be claimed on filing of an ATED return. Reliefs are available if your property is; 

+ Let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner

 

+ Open to the public for at least 28 days a year

 

+ Being developed for resale by a property developer

 

+ Owned by a property trader as the stock of the business for the sole purpose of resale

 

+ Repossessed by a financial institution as a result of its business of lending money

 

+ Being used by a trading business to provide living accommodation to certain qualifying employees

 

+ A farmhouse occupied by a farm worker or a former long-serving farm worker

 

+ Owned by a registered provider of social housing

When do I need to submit a return?

Submissions of ATED Returns and payments are subject to very tight deadlines. For companies already in the regime, a return must be filed and payment made within 30 days of 1 April, so for those submitting a return for the 17/18 year, the deadline is 30 April 2017.

Different deadlines are applicable where a company comes within the scope of ATED for the first time within a financial year; although the filing deadline is normally within 30 days of the property coming within the charge.

Failure to notify promptly, even if no tax is payable due to a relief, will result in late filing penalties which typically amount to £1,300 per year, so it is important to be aware of the value of your property/s and whether or not you need to submit a return.

 

If you require any further information, please do not hesitate to contact a member of the Spirare team.

Detailed guidance can be found at https://www.gov.uk/government/publications/stld-annual-tax-on-enveloped-dwellings-ated/annual-tax-on-enveloped-dwellings-returns-guidance