Autumn Budget 2021: Increase in Annual Tax on Enveloped Dwellings (ATED)

ATED is set to increase by 3.1% from 1 April 2023. For companies owning residential property valued at £500,000 to £1,000,000, this will mean an increase in the tax from £3,700 to £3,815. The tax on properties in higher bands will also be increased.

ATED is an often-overlooked tax. It is mainly payable by companies that own UK residential property valued at more than £500,000. The charge levied depends on the valuation of the property and what band it falls within.

Certain exemptions are available to companies that own properties as investments or as trading stock. However, the exemptions must be claimed via an annual return, and penalties are charged for late returns.

A revaluation of properties within the ATED regime is required to be made every five years, with the next revaluation date being 1 April 2022.  For properties acquired before this point, this revaluation will therefore form the basis of the charge for the period 1 April 2022 – 31 March 2027.  Where properties are acquired after 1 April 2022, it will be the acquisition cost that will determine the charge.

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