If corporate clients own residential properties which are each worth over £500,000, they will be required to have completed an ATED ( Annual Tax on Enveloped Dwellings ) return, or made an ATED relief declaration for 2019/20. this is due by 30 April 2019. If full relief is not claimed for the year an ATED charge may also be payable by 30 April 2019.
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 valued above certain amounts.
In these circumstances the dwelling is said to be ‘enveloped’ because the ownership sits within a corporate wrapper or envelope.
There are three things to check before completing the ATED return:
- Property valuation – for the years 2018/19 to 2023/24 the ATED charge is based on the open market value of the property at 1 April 2017, or as at the purchase date if that is later.
- Banding – the ATED charge is levied according to the valuation band he property falls into. You can ask HMRC to complete a pre-return banding check for a property if you believe its value lies within 10% of an ATED band threshold, but it will take HMRC some time to respond to this request.
- Correct year – the tax is payable by 30 April within the chargeable year, so make sure the right amount is paid for the right year. The 2019/20 charge ranges from £3,650 to £232,350.
The ATED applies unless a relief is claimed. The result is that the ATED is most commonly payable when residential property is let uncommercially or to a connected party.
ATED is payable annually in advance by 30 April, based on the taxable value of the property, properties are revalued for the purposes of ATED every five years, for the year 2017/18, ATED is due if the value of the property at 1 April 2012, or cost if acquired after 1 April 2012, exceeds £500,000, whereas, for 2018/19 to 2023/24, the property value as at 1 April 2017 must be used unless it was acquired after 1 April 2017.
Part-disposals, acquisitions of additional land or other substantial acquisitions or additions can trigger a new valuation date.
The ATED return must be filed within 30 days of the acquisition of a high value property, e.g. if you purchase a property on 1 April you must file a return by 1 May. Relief can be claimed for property developers and buy-to-lets, among others, where conditions are met, If the property falls within ATED for the first time part way through the year the amount due is calculated using apportionment. Worth noting refund may be claimed where the property is disposed of part-way through the year.