Annual Tax on Enveloped Dwellings

Act now in order to meet this month’s filing deadline

We are assisting our clients in making their ATED declarations for the 2016/17 chargeable period, these are due for submission this month, by 30 April 2016.

It is worth noting that for 2015/16 reporting the ATED rules only considered properties with a value of more than £1 million.

However from 2016/17 a new band comes into force and owners of an enveloped residential property with a value of £500,000 or more must now file an ATED Return.

Not sure if you are in the ATED regime? Here’s a quick recap on the rules:

  • Since 1 April 2013, a new annual tax charge has applied to “high-value” UK residential property owned by certain “non-natural persons”. This is known as the Annual Tax on Enveloped Dwellings (“ATED”) charge. In nearly all cases a “non-natural person” will be a corporate vehicle used to acquire the property.
  • Since 1 April 2013, UK residential properties which were worth more than £2m as at 1 April 2012 have been within the scope of this charge.
  • The regime was extended with effect from 1 April 2015 to properties valued at more than £1m as at 1 April 2012, and from 1 April 2016 will also apply to properties worth more than £0.5m as at 1 April 2012.
  • A non-natural person within the charge to the ATED is also liable to UK capital gains tax (“CGT”) on disposal of high-value UK property at a gain. This is known as an “ATED-related CGT charge”.

Where an ATED charge applies, a Tax Return and the associated payment will be usually required by 30 April in the year for which the charge applies, i.e. 30 April 2016 for the period 1 April 2016 to 31 March 2017. Different rules apply where e.g. a property is acquired part-way through a year, however. Penalties and interest apply where payment and or filing dates are missed.

Certain categories of buildings, e.g. hotels, guest houses and care homes are not classified as dwellings, so don’t fall within the ATED regime, and a number of further reliefs (most notably for commercial lettings and development activity) may be claimed. At present, these can only by completing and submitting an ATED Tax Return.

Whether you are liable for an ATED charge or need to claim relief from these charges we can help. Please contact us for further assistance.

All views and opinions expressed in the blogs are personal to the writer and may not necessarily be shared by everyone at TAP but our clients are always welcome to put forward alternative views and questions which we will endeavour to share via future blogs, where appropriate.