Accounting, Taxation and Business Planning
Don’t let the complexities of ATED catch you off guard. Our expert team of accountants and tax advisers is here to provide tailored guidance and ensure that you meet your ATED obligations with ease. Whether you need help with filing your ATED return, understanding available exemptions, or making sure your property valuation is accurate, we’re here to make the process straightforward and stress-free.
'Ensuring your tax compliance is straightforward and cost-effective'
UNDERSTANDING THE UK TAX LAW ON ATED
The Annual Tax on Enveloped Dwellings (ATED) can be a confusing subject, but it's important for property owners who have a home owned by a company, partnership, or other corporate structure.
As UK accountants and tax advisers, we want to break it down for you and ensure that you’re fully informed about your responsibilities.
This guide explains what ATED is, when it applies, and how we can help you manage your tax obligations efficiently.
What is the Annual Tax on Enveloped Dwellings (ATED)?
The Annual Tax on Enveloped Dwellings (ATED) is a tax that applies to residential properties in the UK that are owned by a company, partnership, or other corporate entity, rather than by an individual. In simple terms, if a company owns a residential property worth over a certain value, the company will have to pay ATED.
The goal of ATED is to discourage the use of corporate structures to avoid higher rates of tax on high-value residential properties. The tax applies to both UK and overseas companies owning residential property in the UK.
When Does ATED Apply?
ATED applies if your property meets the following conditions:
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Ownership by a Company or Corporate Structure: The property must be owned by a company, partnership, or similar corporate entity. If you own a property personally, ATED does not apply.
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Value of the Property: The property must be valued at more than £500,000. Properties valued above this amount are subject to ATED, though the amount of tax payable depends on the property’s value.
The ATED charge varies depending on the value of the property. For example, properties valued between £500,000 and £1 million are subject to a lower charge, while properties valued at over £10 million attract a much higher tax rate.
How Much Is ATED?
The amount of ATED you need to pay depends on the value of the property and is assessed annually. The charges are updated regularly, and here are some of the typical ranges (subject to change):
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£500,001 to £1 million: Around £3,800 per year
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£1 million to £2 million: Around £7,700 per year
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£2 million to £5 million: Around £15,400 per year
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£5 million to £10 million: Around £23,800 per year
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Over £10 million: Around £58,900 per year
These are just example figures and can change from year to year, so it’s important to stay up to date.
How Does ATED Work?
ATED is an annual charge, so it needs to be paid every year. The deadline for paying ATED is April 30th following the end of the relevant period, which runs from April 1st to March 31st each year.
If you own a property that is subject to ATED, you must file a tax return (known as the ATED Return) with HM Revenue & Customs (HMRC). This return details the value of the property and confirms that the ATED payment has been made. If the value of the property changes, you may need to adjust the return accordingly.
Are There Any Reliefs or Exemptions for ATED?
Yes, there are certain reliefs and exemptions available under ATED. For example, if the property is:
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Used for genuine business purposes (e.g., rental properties or properties used for a trade or business)
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Being developed for resale or
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Occupied by an employee of the company as part of their job
In these cases, it may be possible to claim ATED relief, meaning you don’t have to pay the tax. However, this is a complex area and you should seek advice to ensure that you’re eligible for any exemptions.
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What is self-assessment?Self-assessment is a system or regime by which Her Majesty’s Revenue & Customs (HMRC) assesses and collects direct tax in the UK.
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Should I complete a self-assessment tax return?Most people who pay income tax in the UK do not have to complete self-assessment tax returns. These are primarily employees whose tax is deducted at source under the Pay as you Earn system (PAYE). Self-assessment therefore applies to individuals such as the self-employed (sole traders) who earn in excess of £1,000, landlords that receive rental property income, individuals who receive income from savings, investments and dividends, foreign income, income from tips and commission and any other type of untaxed earnings.
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When are self-assessment tax returns due?The UK tax year starts on 6 April each year and ends on 5 April of the following year. Self assessment returns are due on the 31 January following the end of the tax year. For individuals who wish to submit paper returns, the deadline is 31 October following the end of the tax year.
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What are payments on account?Payments on account are amounts that some individuals are required to pay towards their estimated tax liability for the current tax year. They are calculated based on the previous tax years liability and are paid in two equal instalments of 50% each on the 31st January and the 31st July. These amounts are then deducted from the final liability for the year and a balance payment is usually made, together with a first payment on account for the following tax year.
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How do I get the ball rolling?As a starting point, you would need to register with HMRC in order to receive your 10 digit Unique Tax Payer Reference number (UTR). This number will enable you to submit your tax returns online by the 31st January deadline. If you are completing your own tax return, you would need to create an online account with HMRC once you receive your UTR number. Alternatively, if you need to help and support with getting your tax affairs complete and up to date then please get in touch for your free consultation.
How Can We Help?
Managing ATED can be complicated, especially when it comes to valuing properties correctly, ensuring your returns are filed on time, and taking advantage of any available exemptions. As experienced UK accountants and tax advisers, we are here to help you navigate the complexities of ATED compliance.
Our services include:
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Expert ATED Advice: We’ll help you understand if your property is liable for ATED and provide advice on how to minimise your tax exposure.
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ATED Return Filing: Our team can take care of preparing and filing your ATED returns, ensuring compliance with deadlines and avoiding costly penalties.
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Exemption and Relief Guidance: If you believe you qualify for any ATED relief or exemption, we can provide the necessary support to claim these and reduce your tax liabilities.
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Property Valuation Recommendations: Although we don't carry out property valuations ourselves, we can recommend trusted property valuers who can accurately assess the value of your property for ATED purposes.