Annual Tax on Enveloped Dwellings (ATED)

Annual Tax on Enveloped Dwellings (ATED) is an annual tax levied on companies and certain other bodies (such as a partnership that includes a company as one of the partners) that own UK residential property. The charge is calculated depending on the value of the dwelling at 1 April 2012 or on acquisition if later but then every 5th anniversary after 1 April 2012. However, it is important to remember that the charge is per dwelling so a block of flats will contain multiple dwellings, each potentially requiring an ATED tax return and payment. Reliefs can apply such for house builders but in the absence of these reliefs the amount of ATED due per dwelling is as follows:

Property Value 2014/15 2015/16
Less than £1m £0 £0
£1m but less than £2m £0 £7,000
£2m but less than £5m £15,400 £23,350
£5m but less than £10m £35,900 £54,450
£10m but less than £20m £71,850 £109,050
£20m + £143,750 £218,200

If you are a company owning UK residential property then this tax may apply to you, subject to the detailed legislation and HMRC guidance, and in particular you should note that from 1 April 2016, properties that were worth over £500,000 and up to £1m at 1 April 2012 will be caught. The charge applies to individual properties, so a company with a portfolio of residential properties valued at say £7m but where no individual property exceeds the above values, will not be caught.

At Richardson Swift we can help advise on any potential tax exposure (including whether any statutory exemptions apply), and assist with online filing requirements if they apply to your company.