The Annual Tax on Enveloped Dwellings (ATED) is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.
You will need to complete an ATED return if your property is a dwelling in the UK and was valued at more than £500,000 for returns from 2016 to 2017 onwards.
For the 2022-23 tax year, the ATED charge is due for payment on 30 April 2022.
Recap – what is ATED?
The ATED is an annual charge on UK dwellings owned by a ‘Non-Natural Person’ (NNP). NNPs are most commonly companies but also include partnerships which have a corporate partner. The charge does not apply to individuals.
The amount of the charge depends on the value of the property at the applicable valuation date unless a relief is claimed. The charge applies if the property has a taxable value in excess of £500,000. It is payable at the start of each tax year with payment and ATED returns due by 30 April.
The charges for the year commencing 1 April 2022, based on property value, are as follows:
- £500k to £1m: £3,800
- £1m to £2m: £7,700
- £2m to £5m: £26,050
- £5m to £10m: £60,900
- £10m to £20m: £122,250
- £20m+: £244,750.
A time apportioned charge applies when a property is acquired part way through the year with the ATED return and payment deadline being 30 days from completion.
The main headings under which relief applies are in respect of dwellings that are:
- Let to a third party on a commercial basis and not 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;
- Being used by a trading business to provide living accommodation to certain qualifying employees (broadly those with a direct or indirect interest of 10% or more in the business); and
- A farmhouse occupied by a farm worker or a former long-serving farm worker.
An ATED Relief Declaration Return must be submitted in order to claim relief.
The value of the property initially used to calculate the ATED charge is the value or purchase price on acquisition. This is superseded by the open market value of the property as at the most recent statutory revaluation date.
Properties are required to be revalued every five years and the next revaluation date will be 1 April 2022.
For the 2022-23 tax year, the ATED charge, due for payment on 30 April 2022, is calculated based on the value of the property on 1 April 2017 unless it was acquired after that date in which case the acquisition value will apply.
For the 2023-24 tax year and the next four years, the ATED charge will be based on the value of the property on 1 April 2022.