HMRC reminders: Taxpayers of ATED revaluation

What is ATED?

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 in value.

When do I need to value the property?

The property needs to be valued on specific dates, being:

• The initial valuation date
• The revaluation date

The initial valuation is the property valuation at the date of acquisition, which determines whether the property falls within the scope of ATED.

Regardless of when the property was acquired, it needs to be revalued at fixed revaluation dates every five years after 1 April 2012. For example, 1 April 2017, 1 April 2022 and so on. Properties must therefore be revalued using an open market valuation on 1 April 2022.

The new valuation will take effect from 1 April 2023, meaning the 2023/24 reporting year will be the first where the annual charge is determined by the revaluation.

HMRC Reminder letters

HMRC is taking a proactive approach and, during October 2022 should have written to all taxpayers currently within the scope of ATED who they believe are due to submit an ATED return for the 2022/23 reporting year. Automatic reminders will then be sent in February 2023.

For properties not eligible for relief, which have been revalued to within 10% of a banding threshold (£500,000, £1m, £2m, £5m, £10m or £20m) it is possible to ask HMRC to conduct a pre-return banding check to ensure that the property is within the correct ATED band before filing a return. This takes at least 30 working days, however, so must be applied for in plenty of time.

Not currently within ATED

Only those who are currently within the scope of ATED will receive reminder letters from HMRC. This means that properties valued below £500,000 at acquisition, which aren’t currently within the scope of ATED, could be caught out. If the property is valued above £500,000 at 1 April 2022, it will fall within the scope of ATED and an annual return will need to be submitted by 30 April within the reporting year.

If you would like help understanding your ATED reporting requirements, please contact your usual Whiting’s representative or call 01284 752313

Disclaimer - All information in this post was correct at time of writing.