ATED Returns

Annual Tax on Enveloped Dwellings (ATED) is an annual tax charge payable by companies, partnerships (with at least one corporate partner) and certain collective investment schemes that own UK residential properties exceeding £500,000.

The annual chargeable period starts on 1 April each year and both a return should be submitted online to HMRC and any tax paid within one month of the start of the chargeable period to avoid hefty penalties and interest.

Valuation of property

The ATED charge is based on the taxable value of the property. Properties are revalued for ATED purposes every five years. The last revaluation date was 1 April 2022 and it is this value, or if acquired after 1 April 2022 the properties cost, that will determine whether the properties fall within the scope of ATED for the 2024/25 period.

Reliefs available

There are various ATED reliefs available, such as for property rental businesses and property developers and farmhouses occupied by a farm worker. The rules for claiming the relief should be checked closely as occupation by a non-qualifying individual may deny the relief being available. Where a relief applies it must be claimed on a relief declaration return which must be submitted to HMRC by 30 April 2024.

Properties acquired/constructed/converted in the ATED year

Where a UK residential property is acquired exceeding £500,000 through a corporate wrapper during an ATED period, an ATED return and any tax payable will be due within 30 days of purchase. No return is required if the property is covered by a relief which has already been returned on a relief declaration for the chargeable period.

However, where a property is either developed or converted from an existing dwelling during an ATED period, which is valued above £500,000, an ATED return and any tax payable will be due within 90 days of the earlier of the following:

The date on which the property comes into existence for Council Tax, and

The date on which it is first occupied (usually the completion date).

Again, no return is required if the property is covered by a relief which has already been returned on a relief declaration for the chargeable period.

Agreeing your ATED liability with HMRC, if any, is achieved by completing an ATED return. Clients who are fearful that this calculation may be investigated by HMRC, and/or those that are risk averse, may wish to consider taking out our tax investigation service.

Understanding this complicated tax system and paying the correct (minimum) amount of tax, at the correct time, ‘returned’ through the correct mechanism and in a way to minimise the risk of HMRC enquiry, is what most clients seek. This is a complex area of tax. If you would like help understanding your ATED reporting requirements, contact your local Whitings LLP office today.