By Niamh Tracey | 14 March, 2023

The Annual Tax on Enveloped Dwellings Deadline Approaching

The Annual Tax on Enveloped Dwellings (ATED) is a tax payable by companies, partnerships with corporate members and collective investment schemes that own UK residential property valued at more than £500,000.

The ATED rules and regulations were introduced in the Finance Act 2013 and have been in effect since 1st April 2013. Here is a summary of the ATED rules and regulations for companies in the UK. 

Who is liable to pay ATED? 

Companies that own UK residential property valued at more than £500,000 are liable to pay ATED. This includes any UK residential property that is owned or partly owned by a company, even if the company is based outside the UK. 

How is the tax calculated? 

The amount of ATED payable depends on the value of the property. The tax bands for the 2022/23 tax year are: 

  • Properties valued between £500,000 and £1 million: £3,900 
  • Properties valued between £1 million and £2 million: £7,900 
  • Properties valued between £2 million and £5 million: £26,400 
  • Properties valued between £5 million and £10 million: £61,150 
  • Properties valued between £10 million and £20 million: £122,950 
  • Properties valued over £20 million: £247,950 

When is the ATED submission deadline? 

The ATED return must be filed annually, and the deadline for submission is 30th April each year. This means that the return must be filed and any tax due must be paid by this date. The first return must be submitted within 30 days of the liability arising. 

What are the exemptions and reliefs available? 

Certain properties are exempt from ATED, including: 

  • Properties that are used for commercial purposes, such as hotels or guesthouses 
  • Properties that are held as trading stock for sale in the ordinary course of a property development or trading business 
  • Properties that are open to the public for at least 28 days a year 

There are also a number of reliefs available, including: 

  • Property rental businesses relief: This is available if the property is let to a third party on a commercial basis and the rental income is subject to UK tax. 
  • Property development relief: This is available if the property is held for the purposes of property development and the property is being developed with the intention of selling it on completion. 
  • Charitable use relief: This is available if the property is owned by a charity and is used for charitable purposes. 

It is important to note that certain conditions must be met in order to qualify for these exemptions and reliefs. 

What are the penalties for non-compliance? 

Failure to pay ATED or submit the relevant forms on time can result in penalties and interest charges. The penalties for non-compliance are as follows: 

  • Late filing of the return: £100 for the first three months, £10 per day for up to 90 days, and then £300 or 5% of the tax due (whichever is higher) for every subsequent 12 months of delay. 
  • Late payment of the tax: Interest will be charged on the outstanding amount, and a penalty of 1% of the unpaid tax will be charged after 30 days. An additional penalty of 1% of the unpaid tax will be charged after six months, and again after 12 months. 

Please note that the £500,000 inclusion value is assessed on the market value of your property, so it is important to monitor this, especially for properties that were nearing this limit in the previous year. 

We can offer help and guidance across all areas of the ATED legislation so please do not hesitate to get in touch with our office at enquiries@saulfairholm.co.uk or call us on 01522 537575.