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What you need to know about ATED charge on UK residences
Companies, or certain corporate entities, which own a UK residential dwelling (i.e. enveloped dwelling) valued over £500,000 fall within the Annual Tax on Enveloped Dwellings (ATED) regime.
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An ATED return should be submitted to HMRC within 30 days of acquisition and every April whether or not the ATED tax charge is payable. There are some reliefs against the charge the main one being if the dwelling is let out on a commercial rent to a third party.
To comply with the rules, enveloped dwellings must be revalued every five years – and a new valuation date occurred on 1 April 2017. This applies to all properties owned at that date, even if acquired within the last five years. This valuation will be used to file the ATED return for the financial year (to 31 March) 2018-19 to 2022-23..
Enveloped dwellings not in the regime (because they were worth less than £500,000 before the last valuation date) may enter the ATED regime next year. Some dwellings in the regime near the threshold could be tipped into the next tax band resulting in a higher tax charge for the next five years.
As well as the five-yearly revaluation, certain other events can also cause dwellings to be revalued: e.g. part disposals and additions to property e.g. loft conversion. For the purposes of ATED, dwellings include buildings that are in the course of construction or adaptation for residential use.
Companies may not have filed an ATED return up to now on the grounds their enveloped dwelling was valued below £500,000 before 01 April 2017. They should obtain market valuations from a relevant professional before the filing date for the next ATED year (30 April 2018) where the value of the dwelling as at 1 April 2017 might cause the dwelling to fall under the ATED rules or move up higher tax band.
The ATED tax charges for 1 April 2017 to 31 March 2018 are as follows:
| Property Value | Annual Chargeable Amount |
| More than £500,000 but not more than £1 million | £3,500 |
| More than £1 million but not more than £2 million | £7,050 |
| More than £2 million but not more than £5 million | £23,550 |
| More than £5 million but not more than £10 million | £54,950 |
| More than £10 million but not more than £20 million | £110,100 |
| More than £20 million | £220,350 |
For more information, please contact www.exceedca.com
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