• Date

    31 Mar 2021
  • Category

    Tax, Capital Allowances, VAT & Indirect Tax, Private Client

Annual Tax on Enveloped Dwellings (ATED)

Since 1 April 2016, the ATED regime has applied to all UK residential properties worth over £500,000 owned by companies, partnerships with one or more corporate members, and collective investment vehicles – all of which are referred to as Non-Natural Persons (NNPs).

Overview

NNPs holding UK residential property worth over £500,000 need to submit a 2021/22 ATED Return and pay the 2021/22 ATED due (if applicable) for the chargeable period 1 April 2021 to 31 March 2022 by 30 April 2021.

Penalties apply for both late submission and late payment, and penalties can accumulate quickly if ATED filing obligations are overlooked (even if relief from the ATED charge is claimable). Interest will be charged on late paid ATED. ATED can also apply even if the NNP only owns a partial interest in the UK residential property.

If a UK residential property falling within ATED is acquired part-way through a year (or the use of the property changes to bring it in to ATED), an ATED return must be submitted within 30 days of acquisition/change of use. This deadline can be extended to 90 days in some limited circumstances.

Valuation date

The ATED regime, which originally came into effect from 1 April 2013, requires five-yearly property revaluations.

An updated valuation date of 1 April 2017 (or, if later, the date of the property’s acquisition) came into effect from the 2018/19 chargeable period and will apply through to the 2022/23 chargeable period.

If not already obtained, it should be a matter of priority to obtain a 1 April 2017 valuation (if required) for properties falling within the ATED regime in advance of the 30 April 2021 submission deadline for 2021/22 ATED Returns.

ATED Online Service

In order to submit an ATED return to HM Revenue & Customs (HMRC), it is firstly necessary for a NNP to register to the ATED Online Service.

As tax advisers, we have our own ATED Online Service account and can be appointed as agent to act on behalf of a NNP.

An appointed ATED agent can submit ATED returns on behalf of a NNP, and communicate with HMRC on the NNP’s behalf in relation to ATED matters.

Relief Declaration Returns

NNPs that hold multiple properties eligible for ATED relief have been able to submit a single simplified Relief Declaration Return for all properties for which the same type of relief is claimed.

Exemptions / Reliefs

It may be possible to claim an exemption from the ATED charge. The main exemptions being if the NNP uses the property:

  • in a letting business
  • in a bona fide property development business
  • for charitable purposes
  • for public use on at least 28 days per annum.

ATED Charge (when ATED relief is unavailable)

For NNPs who will be required to pay the ATED charge, the 2021/22 ATED charges are as follows:

Property Value Bracket

2021/22 ATED Charge*

£500k+ to £1m

£3,700 (unchanged)

£1m + to £2m

£7,500 (unchanged)

£2m + to £5m

£25,300 (£100 increase)

£5m + to £10m

£59,100 (£250 increase)

£10m + to £20m

£118,600 (£550 increase)

£20m +

£237,400 (£1,150 increase)

*The ATED charges for 2021/22 are calculated based upon the Consumer Price Index increase in the year ended September 2020, rounded down to the nearest £50.

Capital Gains

Non-resident companies disposing of UK residential property are assessable to Corporation Tax on the Capital Gain/(loss) following disposal.

Contact us

For further information on the areas raised in this insight, or to discuss in more detail, please speak with your usual Azets contact or a member of our tax team.

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