Annual Tax on Enveloped Dwellings (ATED) has been with us for over a decade, but would you know when it applies? And what is it?
Annual Tax on Enveloped Dwellings (ATED) is a charge on UK residential property that is held within a company.
The charge is based on the value of the property with rebasing valuations performed every 5 years. The latest revaluation date was 6 April 2022, which will be used for all ATED returns for the 2023/24 tax year.
The charge is a set amount depending on which tier the valuation falls within:
ATED Chargeable amounts for 1 April 2023 to 31 March 2024
| Property Value | Annual Charge |
| More than £500,000 up to £1 million | £4,150 |
| More than £1 million up to £2 million | £8,450 |
| More than £2 million up to £5 million | £28,650 |
| More than £5 million up to £10 million | £67,050 |
| More than £10 million up to £20 million | £134,550 |
| More than £20 million | £269,450 |
It might not surprise you to read that London makes up 85% of the total receipts from the ATED charge, with Westminster, Kensington and Chelsea local authority areas accounting for 72% of all ATED receipts.
Of the £111m receipts from ATED charges received nationally, London accounted for £94m, with the North West not appearing on the regional list separately
So why in the North West would you be concerned with ATED?
While there might not be too many £20m+ properties in the Nort West, there will certainly be many easily falling within the lower bandings of £500,000+.
Holding a UK residential property valued at more than £500,000 might bring you within the ATED regime, however, it is possible to avoid suffering an ATED charge, if one of the reliefs applies.
An important and somewhat overlooked aspect is that the relief needs to be applied for via an ATED relief declaration form. Without an ATED relief submission, a property that meets the criteria for an ATED charge could be assessed for the ATED charge by HMRC. In the 2020/21 tax year, there were 21,730 ATED relief submissions made.
ATED Compliance
ATED returns are due by 30 April, where a property was held on 1 April, or within 30 days of acquisition if the property was acquired after 1 April.
Penalties for late returns are charged £100 for an initial late return, with daily penalties of £10 once the delay is over three months late.
Tax geared penalties are charged, based on 5% of the ATED liability or £300 (if higher), at six and twelve months.
One of the main problems with penalties is that HMRC won’t know when an ATED return is due, so there will be no warning letters sent in advance of penalties.
How can MHA help?
If you would like to know more about ATED, please contact our tax advisory team.
