Property worth more than £500k!

 If your company owns residential property worth more than £500k you need to act NOW!

The annual tax on enveloped dwellings (ATED) was introduced as part of a package of measures aimed at making it less attractive to hold high-value UK residential property indirectly, eg through a company, in order to avoid or minimise taxes such as stamp duty land tax (SDLT) on a subsequent disposal of the property.

Annual Tax on Enveloped Dwellings (“ATED”)

The ATED annual charge is applicable where UK residential property is owned by a Non Natural Person (“NNP”). This includes companies (both UK and non-resident) as well as certain other corporate entities.

When ATED was introduced it only applied to properties worth more than £2 million but this has subsequently dropped.  From 1 April 2015 properties worth more than £1 million were within ATED and from 1 April 2016 ATED applies to properties worth more than £500k.

ATED is an annual charge that is payable based on the value of each individual property owned by the NNP –

Property valueAnnual 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

The 2016 ATED charge is calculated by reference to the property value at 1 April 2012.
For 2017 properties will need to be revalued at 1 April 2017 and this value will be used for calculating the ATED charge for the next 5 years.

There are a number of reliefs available that can eliminate or reduce the ATED charge.  You may be able to claim relief for your property if it is:

  • Let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
  • 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
  • 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

All companies owning residential property worth more than £500k have a responsibility to submit the ATED return or submit a claim for relief.  An ATED return needs to be submitted by 30 April and the tax charge must also be paid by this date.

Just because there is no ATED to pay doesn’t exempt the company from the filing requirements.

Baldwins Accountants are one of the fastest growing accountancy practices in the UK. If you think you have a property that may be within ATED speak to Annabel Mason or any member of the Baldwins specialist tax team on 01743 273 999