Complete Guide to Annual Tax on Enveloped Dwellings (ATED)

ATED stands for Annual Taxon Enveloped Dwellings and is a tax that targets properties worth more than £500,000 which are owned by companies.

ATED only applies to residential properties.

A property does not have to be a primary residence in order to be subject to ATED – it could be a holiday home, which would still carry ATED.

ATED is only chargeable to properties worth over £500,000.

ATED is a yearly charge that applies from 1 April 2013 onwards

With respect to ATED, a dwelling is a residential property which is owned by a company.

It does not include commercial properties, hotels, guest houses, boarding school accommodations, hospitals, student halls of residence, military accommodation, care homes or prisons.

ATED charges different rates depending on the value of your property.

ATED does not apply to properties worth between £0 and£500,000.

For properties worth over £500,000 ATED is charged at a percentage of the total value of your property.

The amount you’ll need to pay is worked out using a banding system based on the value of your property.

The ATED charge is payable each year on 30 April.

The ATED bands for 2021-22 and 2020-21 are as follows:

If you’re not sure which value band your property falls into, you can ask HMRC for a PRBC if:
‍
> you’re not due a relief that will reduce your ATED charge to nil
> your property valuation falls within 10%of a banding threshold

The10% banding thresholds are:      
> £450,000 to £550,000
> £900,000 to £1.1 million
> £1.8 million to £2.2 million
> £4.5 million to £5.5 million
> £9 million to £11 million
> £18 million to £22 million

The ATED charge is based on the value of your property as assessed by HMRC. This means that you will need to know the value of the property in order to work out how much ATED you will have to pay.

You can work out the value yourself or you can use a professional, such as an estate agent or chartered surveyor. However, you will have to pay for this service yourself. The valuation of the property must be in pounds sterling.

Another important thing to understand is the valuation date. It depends on the when you owned the property.

The initial valuation date is:

> 1 April 2012 for properties owned on or before that date
> the date you acquired the property if it’s after 1April 2012

There are fixed revaluation dates for all properties, every 5 years after 1 April 2012, for example at 1 April 2017, 1 April 2022 and so on, regardless of when the property was acquired.

The value of the property, for the purposes of calculating ATED, is therefore the later of:

> its initial valuation date
> the revaluation date

Once the value of the property is known, it can be used to work out what property value band it falls under.

And using the property band, you can determine whether you need to pay ATED and how much annual tax you need to pay.

It is important to get this step right, to ensure that no penalties are incurred.

We help clients like you with working out the correct amount of ATED and filing the annual ATED return to HMRC.

Feel free to schedule a no-obligation online meeting to discuss your case.

The ATED return and payment can be made through the ATED online service. You can either do this yourself or appoint an agent.

The ATED return is due by midnight on 30 April 2020. For example, the ATED return for 2020/2021will need to be submitted by midnight on 30 April 2020.

When do I you need to submit your return ?

Normally you need to submit your return:
> by 30 April if your property is within the scope of ATED on 1 April
> within 30 days of acquisition if your property comes within the scope of ATED after 1 April
> for a newly built property, within 90 days of the earliest of the date:  
1) your property becomes a dwelling for Council Tax purposes
2) it’s first occupied

The best way to avoid any penalties is to submit yourATED return and make payment on time, every year.

We can help you do this with our expert advice and support. Schedule a no-obligation online meeting with us today.

The penalties for late payment or non-payment of ATED depend on:

- the type of ATED return you should have submitted and how long it is overdue for
- if the ATED return is not filed within 30 days, a penalty will apply
- if the return is more than 3 months late, a penalty will also apply

The penalties for late payment or non-payment of ATED are as follows:
‍
- an initial penalty of£100 on the day after the date your tax return or document was due
- daily penalties of £10 per day for 90 days after your return or document was 3 months late
- a ‘further penalty’ of £300 or 5% of our estimate of your liability to tax (whichever was the higher) after your tax return or document was 6 months late
- a second ‘further penalty’ of £300 or 5% of our estimate of your liability to tax, (whichever was the higher) after your tax return or document was 12 months late

If you do not submit an ATED return at all, you will have to pay a penalty. This also applies if you have a property that is subject to ATED but do not submit an ATED return.

Please contact us if you have any questions about the penalties for late payment or non-payment of ATED. We can help you understand and avoid them. Schedule a no-obligation online meeting with us today.

You may be able to claim relief, from ATED, for your property if it is:

- let to a third party on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner
- open to the public for at least 28 days a year
- being developed for resale by a property developer
- owned by a property trader as the stock of the business for the sole purpose of resale
- repossessed by a financial institution as a result of its business of lending money
- acquired under a regulated home reversion plan
- being used by a trading business to provide living accommodation to certain qualifying employees
- a farmhouse occupied by a farm worker or a former long-serving farm worker
- owned by a registered provider of social housing or a qualifying housing co-operative

Find more information about these reliefs and the conditions you need to meet in sections 30 to 41 of the ATED technical guidance.

If you think that you may be eligible for ATED relief, please contact us as soon as possible. We can help you determine if you qualify and submit the application on your behalf.

If you are not sure, and want to find out if ATED applies to your property and if you need to pay any ATED annual tax.

Welp clients like you with working out the correctamount of ATED and filing the annual ATED return to HMRC.

In this article we’ve tried to answer as many common questions as possible about ATED or Annual Tax onEnveloped Dwellings.

If something still isn’t clear than our team is ready and waiting to help. Talk to one of our experts today for a free consultation or feel free to contact us anytime with your question.