Annual Tax on Enveloped Dwellings
All companies (whether UK or not) holding UK residential property valued at over £500,000 are subject to the Annual Tax on Enveloped Dwellings (ATED).
The ATED year runs from 1 April to 31 March and companies must file an ATED return by 30 April for each ATED year during which they hold a UK residential property. If any reliefs are available then an ATED relief return must be submitted in order to claim them, if a relief does not apply then the company will be liable to pay an annual chargeable amount based on the value of the property at the most recent valuation date.
The ATED rules require a revaluation of existing property every five years. The last revaluation date was 1 April 2017 or date of acquisition whichever is later. Therefore, from 1 April 2023 the valuation date will change to 1 April 2022 or date of acquisition if later.
For the ATED return due for 2023/24 which is due for filing by 30 April 2023, all existing properties will be required to be revalued at 1 April 2022. This could mean more properties are likely to breech the £500,000 limit and fall into the ATED regime for the first time. There is the possibility that some properties have fallen in value and will therefore fall out of ATED regime, although this is likely to be rare.
Please note that any failure to file an ATED return, even if an ATED relief is claimed, penalties will be applied.
Annual Tax on Enveloped Dwellings –What do you need to do
- Any residential properties within entities already claiming ATED reliefs (such as property developers or residential landlords) will not need to revalue the properties at 1 April 2022 provided the reliefs continue to apply.
- Other entities with residential properties should review their portfolios and the individual values of any residential properties at 1 April 2022 to ensure that any ATED compliance matters are known well in advance and complied with. Whilst the revaluation date does not kick in until 2023 it is advisable to obtain the valuation now.