Annual tax on enveloped dwellings (ATED)

ATED is an annual tax charge payable by onshore and offshore corporate entities, including companies, partnerships with corporate members, or other collective investment vehicles, such as unit trusts or open ended investment companies, that own wholly or partly, UK residential properties (“dwellings”) valued above certain amounts. 

In these circumstances the dwelling is said to be 'enveloped' because the ownership sits within a corporate 'wrapper' or 'envelope'.

Corporate entities that hold UK residential properties, which are each, valued over £500k are affected.

Dwelling

Your property is a dwelling if all or part of it is used, or could be used, as a residence, for example a house or flat. It includes gardens, grounds and buildings within them.

Sometimes a dwelling is part of a larger, mixed-use property that has parts not used for residential purposes. Only the residential part would have ATED payable on it. The residential part will need to be valued to work out which ATED band it falls into. 


Some buildings are not considered to be dwellings. e.g. hotels, guest houses, boarding school accommodation,hospitals, student halls of residence,care homes, military accommodation, Prisonsare not considered dwellings and aren't included under ATED. 

How much do I need to pay under ATED?

The amount of tax you have to pay will depend on the valuation attached to the property. The following rates are effective for the year from 1 April 2017.

ATED applies on a proportionate basis (the ATED you pay will be calculated by reference to the number of days in the year the property falls within ATED) if you only own the dwelling for part of a year or you change how you use the property so that it moves into or out of ATED.

ATED reliefs and exemptions:-

There are reliefs and exemptions available against the ATED charge. You can submit the relief declaration return to claim a relief that would reduce your ATED charge to NIL.

A dwelling might get relief from ATED if it is: 

• Property rented to unconnected third parties as a genuine property rental business;
• Property development businesses;
• Properties run as a commercial trade and open to the public for at least 28 days per year.

The above list is not exhaustive so contact us weather an ATED relief can be claimed

2018/19 ATED Returns and Payments Deadlines:-

The filing deadline for the 2019/20 ATED return is 30 April 2019. Any ATED payment thereon is also due on 30 April 2019.

Penalties:-

ATED uses the self-assessment penalty regime. A late return has £100 penalty immediately applied, with further fixed charges stacking up after 3 months, 6 months, up to a maximum of £1,600 at the 12 months mark.

We can demystify annual tax on enveloped dwelling for you:-

If you have received an ATED penalty notice or paid an ATED penalty recently? You may not be liable for this penalty and if you have already paid, you could be eligible for a refund.

Furthermore, if you are affected by ATED and require assistance or tax advice, please contact us and we will be happy to assist you. 

By Ahsan Rashid