Annual Tax on Enveloped Dwellings (ATED)

Annual Tax on Enveloped Dwellings (ATED)

ATED is an annual tax charge on the value of UK residential property which is "enveloped" within a company, a partnership which has a corporate partner or member, or a collective investment scheme, wherever resident.

The charge only applies to UK residential property with a single dwelling market value of over £500,000 and is applied as follows:

 

Property Value  Annual Charge 
 More than £500,000 but not more than £1 million  £3,500
 More than £1 million but not more than £2 million  £7,000
 More than £2 million but not more than £5 million  £23,350
 More than £5 million but not more than £10 million  £54,450
 More than £10 million but not more than £20 million  £109,050
 More than £20 million  £218,200

 

Other impacts of ATED:

 • 15% stamp duty land tax on acquisition (single dwelling in excess of £500,000)
• CGT payable at 28% on sale

Exemptions:

• Charities
• Hotels/student halls of residence/care homes
• Property rental businesses
• Property development businesses

Reporting requirements:

• 30 days to report the acquisition of an ATED property
• 30 April – annual report for 2016/17 tax year (i.e. in advance)
• Valuation – need to value the property at 2013, and then every 5 years
• Penalties – up to £1,300 even if no ATED tax is due
• Exemption – a report is due even if any exemptions apply (but not if a charity, hotel or care home)

Key messages:

• ATED applies to UK residential properties worth more than £500,000
• Large numbers of properties will be caught
• Make sure you file nil returns even if your property is exempt

Please get in touch with us if you have UK residential property within a company or partnership with a limited company member. We can assist with ATED returns and liabilities and can also advise you on how to best restructure in light of ATED in the most tax efficient way.                         

Steve Crompton
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
email: steve.crompton@jsllp.co.uk

Chris Barrington
Tax Partner
direct dial: 01942 292505
mobile: 07730 436070
email: chris.barrington@jsllp.co.uk

 

 

 

 

 

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