Annual Tax on Enveloped Dwellings (ATED) is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.
The tax charge is payable in advance, every year and in the year of purchase.
Having been introduced in the Finance Act 2013 (partly to prevent companies from avoiding the higher rate of stamp duty land tax), ATED has been around for a while, but the shifting thresholds over the years have meant that more and more companies need to consider whether they fall within the scope of ATED.
You will need to complete an ATED return if your property:
• Is a dwelling
• Is in the UK
• Was valued at more than:
o £2 million on 1 April 2012, or at acquisition if later, for returns from 2013-14 onwards
o £1 million on 1 April 2012, or at acquisition if later, for returns from 2015-16 onwards
o £500,000 on 1 April 2012, or at acquisition if later, for returns from 2016-17 onwards
• Is owned completely or partly by a non-natural person, i.e.:
o A company
o A partnership where one of the partners is a company
o A collective investment scheme (e.g. a unit trust or open ended investment vehicle)
A new ATED band came into effect on 1 April 2016 for properties valued between £500,000 and £1 million. Whereas it was only high value properties affected previously, more properties are now falling within the scope of ATED.
Valuation is per property, not per portfolio.
Chargeable amounts for 1 April 2017 to 31 March 2018
If all of the above criteria are met, the amounts payable are as follows:
More than £500,000 but not more than £1 million – £3,500
More than £1 million but not more than £2 million – £7,050
More than £2 million but not more than £5 million – £23,550
More than £5 million but not more than £10 million – £54,950
More than £10 million but not more than £20 million – £110,100
More than £20 million – £220,350
Property value is determined as the value of the property on 1 April 2012, or on cost if acquired at a later date. Properties must be revalued every 5 years, meaning the first revaluation date to bear in mind is 1 April 2017.
ATED is a self-assessed tax, and returns must generally by filed by 30 April of the year in question, if the taxpayer owns the relevant property on 1 April. For example, ATED returns for the 2017-18 year must be submitted by 30 April 2017.
Acquisitions falling with the scope of ATED must be reported within 30 days.
Newly built dwellings become chargeable to ATED upon completion and must be reported on an ATED return within 90 days.
ATED returns are required even if the taxpayer wishes to claim relief (see below) of the relevant tax charge.
Usually one ATED return is required per property.
These work in a similar way to self assessment penalties:
• Filed after filing deadline – £100
• Filed 3 months late – daily penalties of £10 per day up to 90 days (maximum £900)
• Filed 6 months late – 5% of tax due or £300, if greater
• Filed 12 months late – 5% of tax due or £300 if greater, unless the taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due
• Filed 12 months late and taxpayer deemed to have deliberately withheld information – based on behaviour:
o Deliberate and concealed – withholding 100% of tax due, or £300 if greater
o Deliberate but not concealed – 70% of tax due, or £300 if greater
Reductions will apply for prompted and unprompted disclosers and telling, giving and helping.
• 30 days late – 5% of tax due
• 6 months late – 5% of tax outstanding at that date
• 12 months late – 5% of tax outstanding at that date
A Relief Declaration Return can be filed where no ATED is payable in the following situations:
• Property rental business
• Dwellings open to the public for at least 28 days a year
• Property developed for resale by a property developer
• Property traders carrying on a property trading business
• Properties repossessed by a financial institution in the course of lending
• Farmhouses occupied by a farm worker or a former long-serving farm worker
• Properties owned by a registered provider of social housing
Where the same relief applies to numerous properties, one Relief Declaration Return can be filed. Separate Relief Declaration Returns are required for each type of relief being claimed.
Relief Declaration Returns must also be filed by 30 April of the year in question, and all forms can be submitted online via the HMRC website or on paper.
If you need any further help with this then don’t hesitate to get in touch.
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