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Guide to ATED or Annual Tax on Enveloped Dwellings

2-minute read

Josh Hall

29 November 2017

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ATED, or the Annual Tax on Enveloped Dwellings, is a tax levied on certain types of property. If your company owns residential property, you might have to pay it.

What is ATED?

ATED, or the Annual Tax on Enveloped Dwellings, is a type of property tax. It is levied on dwellings in the UK valued at more than £500,000, and owned by a company, a partnership in which one partner is a company, or a collective investment scheme.

What is the meaning of ‘dwelling’ for ATED?

ATED is only levied on properties that are classified as ‘dwellings’. For the purposes of ATED, a dwelling is a property where all or part is or could be used as a place of residence. The dwelling would include the property’s garden or grounds if applicable, along with any further buildings contained in them.

There are some properties that are specifically not classed as dwellings for the purposes of ATED, the most important of which are hotels and guest houses.

How do I value my property for ATED?

For the 2016-17 tax year onwards, an ATED return only needs to be made on dwellings with a value of £500,000 either on 1 April 2012, or on the date of acquisition if this date is later.

You can value the property yourself or use a professional, but either way the valuation must be on the basis of an open market, and of willing buyer willing seller.

For properties you owned on or before 1 April 2012, the same valuation will have been set for the next five chargeable periods after this date. In other words, such properties must be revalued as of 1 April 2017. This new valuation will cover the next five chargeable periods starting 1 April 2018.

For properties owned after 1 April 2012, you should use the value of the property on the date that you acquired it. If it’s a new building, or if it has been altered in such a way as to become a dwelling, the valuation should be set on the date it was first occupied, or on the date it was deemed to have come into existence for Council Tax purposes, whichever is earlier.

It’s important to note that HMRC has the power to challenge a valuation, and will charge interest and penalties if the valuation is found to be wrong.

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.

Property valueATED cost
£500,000 - £1 million£3,500
£1 million - £2 million£7,050
£2 million - £5 million£23,550
£5 million - £10 million£54,950
£10 million - £20 million£110,100
Over £20 million£220,350

How do I submit my ATED return?

You should submit your return using the ATED online service. You can also use the service to appoint an agent. Returns must be submitted by 30 April each year, and payment is due on the same date.

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