ATED - Annual Tax on Enveloped Dwellings

The Annual Tax on Enveloped Dwellings (ATED) has applied since 1 April 2013 and is payable predominantly by Companies (and other non-natural persons) that own UK residential property. The charge is payable in advance and increases annually in line with the Consumer Price Index.

What is a dwelling?

If all or part of your property is or could be used as a residence, then it is classed as a dwelling. Properties such as care homes, student halls of residence and guest houses do not count as dwellings for ATED purposes.

What is required?

Where your company owns a dwelling valued at more than £500,000, it will need to file an ATED return even if no tax liability arises due the use of available of reliefs (see below).

Returns are required to be made annually between 1 April and 30 April, in addition an initial return is due within 30 days of the purchasing of a property that falls within the ATED regime. Where a property is acquired or disposed of (or its use changes) during the tax year the charge will be pro-rated. Payment of any charge arising is due at the same time as the return.

Valuing your property

The ATED rules require that a property is revalued every five years as a minimum. In respect of the 2023/24 tax year, properties already owned should have been re-valued as at the 1 April 2022 and any properties bought after 1 April 2022 valued at their purchase price. These valuations will be used for tax years up until the 2027/28 tax year after which the value obtained on the next compulsory re-valuation date of 1 April 2027 will be used.

It is not necessary to obtain a professional valuation, for example from a surveyor, but any valuation used is your responsibility and may be subject to dispute by HMRC. You may wish therefore wish to obtain a formal valuation and retain a copy for your records.

Chargeable amounts for 2023/24

Residential property value
More than £500,000 to £1 million	£4,150
More than £1 million to £2 million	£8,450
More than £2 million to £5 million	£28,650
More than £5 million to £10 million	£67,050
More than £10 million to £20 million	£134,550
More than £20 million	£269,450

Relief available

There are a number of reliefs available that may mean that you do not need to pay any ATED on your property or reduce the charge due. You may be able to claim relief if your property is:

open to the public for at least 28 days a year

being developed for resale by a property developer
owned by a property trader as the stock of the business for the sole purpose of resale
repossessed by a financial institution as a result of its business of lending money
acquired under a regulated home reversion plan
being used by a trading business to provide living accommodation to certain qualifying employees
a farmhouse occupied by a farm worker or a former long-serving farm worker
owned by a registered provider of social housing or a qualifying housing co-operative

let on a commercial basis to an unconnected third party and is not at any time, occupied (or available to a connected party) – in the context of ATED, there is a very broad range of people that HMRC could consider a connected party, we would recommend seeking advice should you begin letting to anyone not sourced through an external agency.

The ‘Homes for Ukraine’ Scheme and ATED relief

From 1 April 2022, relief from ATED will also be available while a residential property is being used under the ‘Homes for Ukraine’ Scheme.

Can we help?

This can be a complex area of taxation and we would recommend seeking assistance prior to submitting ATED returns.

Therefore, please feel free to contact us

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