The Annual Tax on Enveloped Dwellings (ATED) is a tax on high-value residential properties that are held within an ‘envelope’, such as a company or a partnership with at least one corporate partner. The charge does not apply to properties held by individuals.
The charge may apply where a company (or a partnership with at least one corporate partner or a collective investment scheme (such as a unit trust or an open-ended investment company)) owns all or part of a dwelling in the UK which was valued at more than £500,000 on 1 April 2017 (the last revaluation date) or acquired for more than this since that date. It is worth noting that the next revaluation date arises on 1 April 2022, which applies for the ATED year beginning on 1 April 2023.
The charge is payable annually in advance. Where a property is within the scope of the ATED on 1 April, an ATED return must be made online by 30 April and any tax payable for the period from 1 April to the following 31 March must be paid by the same date. The table below shows the rates of ATED which apply for the period from 1 April 2022 to 31 March 2023.
Property Rental Business Relief
There are a number of reliefs available which may reduce the ATED charge to nil. One of these is the Property Rental Business Relief.
The ATED charge is reduced to nil if the relevant property is let on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner. Provided that this test is met, relief will be available.
The relief must be claimed through HMRC’s ATED online service. Even where the relief reduces the ATED charge to nil, a Relief Declaration Return needs to be completed.
HMRC will charge late filing penalties where ATED returns are not filed on time.
If you have any further questions please contact a PEM adviser.