ATED Filing reminder – Deadline is 30th April 2019

Annual Tax on Enveloped Dwellings (“ATED”) has been with us for several years now, but there are still a lot of people not aware that ATED has mandatory filing requirements, even if no ATED charge arises due to one of the reliefs available.

This article is a timely reminder and refresher of the ATED basics to bear in mind when reviewing your property portfolio ahead of the 30 April 2019 filing deadline.

The ATED rules impose an annual charge where UK residential property (i.e. – a dwelling) valued more than £500,000 is owned by a Non-Natural Person (“NNP”); an NNP includes companies (both UK and non-resident) as well as certain other corporate entities.

The ATED charge is payable based on the value of each individual property owned by the NNP – the 2019/20 rates are set out below;

Property value2019/20

ATED charge

More than £500,000 but not more than £1 million£3,650
More than £1 million but not more than £2 million£7,400
More than £2 million but not more than £5 million£24,800
More than £5 million but not more than £10 million£57,900
More than £10 million but not more than £20 million£116,100
More than £20 million£232,350

The ATED charge is linked to indexation so the above rates will increase each year.

ATED returns are submitted in April each year for the fiscal year in advance. That is, for 2019/2020, ATED returns and any ATED charge must be submitted and paid over to HMRC by 30 April 2019 for any properties held by the NNP at the start of the tax year.

For properties already held by the NNP, the ATED charge is based on the property’s value as at 1 April 2017 (the valuation gets updated every 5 years).

However, if your NNP acquires a UK dwelling during the year worth more than £500,000 or incurs expenditure on a property it already owns, which results in its value increasing above £500,000, these properties will also be caught by the ATED rules as well; ATED returns and partial ATED charges can apply.

Likewise, if your NNP disposes of a property that was the subject of an ATED charge, they will need to submit an amended return during the year to reclaim part of the ATED charge already paid.

That is, the ATED charge must be paid up front and in full, even if you know your client will be selling an ATED property shortly after 30 April.

There are several reliefs available that can eliminate or reduce the ATED charge.  Your NNP may be able to claim relief for the 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 because 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

The only way to claim the above reliefs is to submit the appropriate relief declaration form.

That is, all companies owning residential property worth more than £500k must submit either the ATED return or submit a claim for relief.

If you would like to discuss this in further detail, please contact your local Baldwins office or ask to speak with one of our tax experts, who would be happy to assist.