Annual Tax on Enveloped Dwellings (ATED)
On 1 April 2013, the government introduced the Annual Tax on Enveloped Dwellings
This originally applied to all UK residential properties worth over £2 million owned by companies, partnerships with one or more corporate members, and collective investment vehicles – all of which are referred to as non-natural persons (NNPs).
From 1 April 2015, the ATED regime was extended to include all UK residential properties held by NNPs worth over £1 million.
From 1 April 2016, the ATED regime was further extended to include all UK residential properties held by NNPs worth over £500,000.
NNPs holding UK residential property worth over £500,000 need to submit a 2020/21 ATED Return and pay the 2020/21 ATED due (if applicable) for the chargeable period 1 April 2020 to 31 March 2021 by 30 April 2020. Penalties apply for both late submission and late payment, and penalties can accumulate quickly if ATED filing obligations are overlooked (even if relief from the ATED charge is claimable). Interest will be charged on late paid ATED.
ATED can also apply even if the NNP only owns a partial interest in the UK residential property.
If a UK residential property falling within ATED is acquired part-way through a year (or the use of the property changes to bring it in to ATED), an ATED return must be submitted within 30 days of acquisition/change of use. This deadline can be extended to 90 days in some limited circumstances.
The original valuation date to determine the ATED charge was 1 April 2012 (or, if later, the date of acquisition) for ATED Returns between 2013/14 and 2017/18.
However, the ATED regime requires five-yearly property revaluations. A new valuation date of 1 April 2017 (or, if later, the date of acquisition) was introduced from the 2018/19 chargeable period and will apply through to the 2022/23 chargeable period.
If not already obtained, it should be a matter of priority to obtain a 1 April 2017 valuation for properties falling within the ATED regime in advance of the 30 April 2020 submission deadline for 2020/21 ATED Returns.
Exemptions / Reliefs
It may be possible to claim an exemption from the ATED charge, the main exemptions being, if the NNP uses the property:
- in a letting business
- in a bona fide property development business
- for charitable purposes
- for public use on at least 28 days per annum
- for certain company employees.
The first two points will only apply where they are carried out commercially and the properties are not available to (or occupied by) anyone connected with the owner.
Relief Declaration Returns
From 1 April 2015, NNPs that hold multiple properties eligible for ATED relief have been able to submit a single simplified Relief Declaration Return for all properties for which the same type of relief is claimed.
ATED Charge (when ATED relief is unavailable)
For NNPs who will be required to pay the ATED charge, the 2020/21 ATED charges are as follows:
|Property Value Bracket||2020/21 ATED Charge|
|£500k+ to £1m||£3,700|
|£1m+ to £2m||£7,500|
|£2m+ to £5m||£25,200|
|£5m+ to £10m||£58,850|
|£10m+ to £20m||£118,050|
From 6 April 2019, ATED-related CGT was abolished, and non-resident companies are no longer required to complete non-resident CGT returns. Non-resident companies disposing of UK residential property are now assessable to corporation tax (and not CGT) on the gain/(loss) following disposal.
Should you wish to enquire further into these areas please get in touch with your normal Baldwins contact or a member of our specialist tax team.