Do you have an obligation to file an Annual Tax on Enveloped Dwellings (ATED) Return?

WHAT IS ATED?

ATED is an annual tax payable in advance by companies and other non-natural persons (including partnerships with corporate members) who own an interest in UK residential property valued at over £500,000.

The charge applies to houses, self-contained flats, gardens and mixed-use properties. Certain properties such as hotels, guest houses and care homes are specifically excluded.

WHAT ARE MY COMPLIANCE OBLIGATIONS?

ATED returns are required for the period to 31 March each year. The next period runs from 1 April 2025 to 31 March 2026. The return must be submitted to HMRC by 30 April 2025. Any tax payable is also due by this date.

Since ATED is a forward-looking tax, and the future is difficult to predict, amended returns are required to be submitted where a business acquires or disposes of a UK residential property with a value exceeding £500,000 within the chargeable period. The ATED charge payable to HMRC, or repayable to the business, is apportioned based on the acquisition date and/or the disposal date of the property.

CAN I CLAIM RELIEF ON MY ATED CHARGES?

If your company or the property falls under one of the following categories, you may be able to claim relief, possibly reducing the ATED charge to nil. However, it is important to note that the claim for relief is not automatic and a Relief Declaration Return must be submitted to HMRC in order to make the claim.

• You are a property rental business, and the property is let to a third party on a commercial basis and is not occupied (or available for occupation) by anyone connected with the owner of the business.
• The property is open to the public for at least 28 days a year.
• You are a property developer, and the property is being developed for resale.
• You are a property trading business, and the property is held as the stock for the sole purpose of resale.
• The property has been repossessed by a financial institution as a result of its business of lending money.
• The property has been acquired under a regulated home reversion plan.
• You are a trading company and are using the property to provide living accommodation to certain qualifying employees.
• The property is a farmhouse and is occupied by a farm worker or a former long-serving farm worker.
• You are a registered provider of social housing or a qualifying housing co-operative.

HOW MUCH IS THE ATED CHARGE?

The charges for ATED are based on the property value and will depend on which valuation band your property falls into (see below guide on the valuation to be used).

Failure to comply with ATED reporting and payment requirements can attract significant penalties.

HOW DO I KNOW WHAT VALUE TO USE?

The legislation dictates the valuation to be used and requires a new valuation to be obtained at fixed valuation dates. The most recent valuation date was 1 April 2022, meaning that the value used in ATED returns from 1 April 2023 until 31 March 2028 will be based on the open market value at 1 April 2022, or the value at the date of acquisition, if later.

The next valuation date will be 1 April 2027, which will be applicable for ATED returns from 1 April 2028 to 31 March 2033, and so on.

However, if the property is acquired between the fixed valuation dates, the value at acquisition will be used as default.

PRE-RETURN BANDING CHECK (PRBC)?

Where the value of a residential dwelling falls within 10% of an ATED threshold, HMRC can be asked to carry out a PRBC. This is a request for confirmation that HMRC agree with the ATED band the property falls within.

HOW CAN AAB ASSIST ME?

For further information regarding valuations, completion and submission of ATED returns or the completion and submission of PRBC’s for ATED purposes, please do not hesitate to contact Stuart Petrie or your usual AAB contact for assistance.