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Annual tax on enveloped dwellings (ATED)

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Most residential properties (dwellings) are owned directly by individuals. But in some cases a dwelling may be owned by a company, a partnership with a corporate member or other collective investment vehicle. In these circumstances the dwelling is said to be 'enveloped' because the ownership sits within a corporate 'wrapper' or 'envelope'.

ATED is a tax payable each year by companies on high value residential property (a dwelling). 

ATED charge

Property value at 1 April 2017 or acquisition 2018/19 2017/18
More than £500,000 but not more than £1m £3,600 £3,500
More than £1m but not more than £2m £7,250 £7,050
More than £2m but not more than £5m £24,250 £23,550
More than £5m but not more than £10m £56,550 £54,950
More than £10m but not more than £20m £113,400 £110,100
More than 20m £226,950 £220,350

What is ATED?

Most residential properties (dwellings) are owned directly by individuals. But in some cases a dwelling may be owned by a company, a partnership with a corporate member or other collective investment vehicle. In these circumstances the dwelling is said to be 'enveloped' because the ownership sits within a corporate 'wrapper' or 'envelope'.

ATED is a tax payable each year by companies on high value residential property (a dwelling).

An ATED tax return is needed for your property if all of the following apply:

  • it's a dwelling (see below for definition)
  • it's situated in the UK
  • it was valued at more than £500,000 on 1 April 2017, or at acquisition if later. Therefore a new valuation is required as at that date and this valuation will apply for the charges to the tax year 2022/23
  • it's owned, completely or partly, by a company, a partnership where one of the partners is a company, or a 'collective investment vehicle' - for example, a unit trust or an open ended investment company.

There are reliefs that could reduce the tax completely but you can only claim them if you complete and send in a return.

There are also a number of exemptions from the tax, most significantly, charitable companies using the dwelling for charitable purposes, which mean you may not have to file a return.

The amount of ATED is worked out using a banding system based on the value of your property. You need to find out which band the value of your property falls into. 

Disposals of ATED property are subject to capital gains tax at 28% unless one of the reliefs apply, in which case normal rates will be charged (for most companies 19%).

 

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