Annual Tax on Enveloped Dwellings (ATED)
By Hiren Patel, Tax Manager
The Annual Tax on Enveloped Dwellings (ATED) was introduced in 2013 to eliminate any tax advantages from holding high-value homes in a corporate structure. In particular the intention was to prevent non-domiciled investors gaining an advantage by holding UK residential property in a non-UK company to avoid triggering UK stamp duty land tax or capital gains tax charges on a subsequent disposal.
However, the charge can apply to any UK residential property wholly or partly owned by a company (including a partnership with a corporate member).
The annual charge is based on the value of the property at 1 April 2022 or date of acquisition if later.
The threshold for properties potentially subject to the charge was originally £2,000,000 but from 1 April 2016 this reduced to £500,000 so there will be a lot more businesses affected.
The ATED charges for 2024/25 is as follows:
| Property Value | Annual Charge |
| More than £500,000 up to £1million | £4,400 |
| More than £1million up to £2million | £9,000 |
| More than £2million up to £5million | £30,550 |
| More than £5million up to £10million | £71,500 |
| More than £10million up to £20million | £143,550 |
| More than £20million | £287,500 |
Most companies that own residential property as part of a commercial business should be eligible for relief from the charge but it is necessary to file an annual return to claim the relief. The most common reliefs are likely to fall within the following categories:
- property development
- property rental
- farmhouses
- property occupied by employees
It is necessary to carefully consider whether the conditions for relief apply in each case.
The filing and payment date (if applicable) for affected properties (including claims for relief) is 30 April 2024.
Failure to submit a return will result in an initial penalty of £100 followed by daily penalties if more than 3 months late. Penalties of up to 15% also apply for failure to pay the ATED charge in time.
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