High value residential property let by a company – does the ATED apply?
The Annual Tax on Enveloped Dwellings (ATED) is a tax on high-value residential properties that are held within ‘an envelope’, such as company or a partnership with at least one corporate partner. The charge does not apply to properties held by individuals.
The charge may potentially apply where a property in the UK which is valued at more than £500,000 is owned completely or partly by a company, a partnership with at least one corporate partner or a collective investment scheme (such as a unit trust or an open-ended investment company).
Properties are revalued for the purposes of ATED every five years. Part-disposals, acquisitions of additional land or other substantial acquisitions or additions can also trigger a new valuation date.
For 2023-24 to 2027-28, the property value as at 1 April 2022 must be used (unless it was acquired after 1 April 2022) so revaluations will be required and we encourage these valuations are obtained as soon as possible.
The charge is payable annually in advance. Where a property is within the scope of the ATED on 1 April, an ATED return must be made online by 30 April and the tax for the period from 1 April to the following 31 March must be paid by the same date. The table below shows the rates of ATED that applies for the period from 1 April 2022 to 31 March 2023.
|Value of property
|More than £500,000 to up to £1 million
|More than £1 million up to £2 million
|More than £2 million up to £5 million
|More than £5 million up to £10 million
|More than £10 million up to £20 million
|More than £20 million
There are a number of exemptions from the ATED charge. One common example is the letting exemption.
The ATED charge does not apply if the property is let on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner.
Provided that this test is met, relief will be available. The relief must be claimed through HMRC’s ATED online service. If the claim reduces the ATED charge to nil (which will be the case if all high-value residential properties owned by the company are let on a commercial basis), a Relief Declaration Return needs to be completed.