The filing deadline for the 2024/25 ATED return is 30 April 2024

The Annual Tax on Enveloped Dwellings (ATED) has applied since 1 April 2013 and is payable mainly by companies that own UK residential property.

Important to note that if you are effected by ATED then the current valuation date is 1 April 2022 in which a re-valuation exercise is needed to categorise which bracket a property falls into for 2024/25.

We are aware that post-Brexit the property market was extremely volatile, therefore property prices may have shifted. It’s not necessary for you to have obtained a professional valuation, for example a valuation from a surveyor or from an estate agent is sufficient, to be able to complete the return. Any valuation that you provide is your responsibility and if there is a material difference in the valuation that results in an underpayment of tax, you will need to pay the additional tax for this and if necessary any earlier or later years. You might also be liable to interest and penalties on the amount of tax underpaid.

If you require any help contact us on the form at the bottom of this page.

What is the Annual Tax on Enveloped Dwellings (ATED)?

The ATED was originally introduced back in 2013 as part of a range of measures to make indirect ownership of high-value residential property in the UK through corporate vehicles – officially termed ‘non-natural persons’ – less attractive to investors looking to avoid or minimise taxes when disposing of their property and driving up the residential property market. The legislation applies to both UK and overseas entities.

For the year 2024/25 companies and other corporate entities, including partnerships with corporate partners, owning a residential property on 1 April 2022 that had a value of £500,000 or more on 1 April 2022 (or purchased for £500,000 or more if purchased between 1 April 2022 and 1 April 2024) will be required to submit an ATED return by 30 April 2024.

The rules have changed since ATED was originally introduced, and properties with a value at 1 April 2022 (previously 1 April 2017) of ≥£500,000, or properties purchased for more than £500,000 since 1 April 2022 will be within the ATED rules from 2023/24 onwards.

Reliefs and exemptions

Under certain circumstances relief is available to companies/mixed partnerships resulting in entities not being subject to the ATED charge, but they are still required to submit an ATED return to HMRC.

There are also cases where properties are exempt from ATED, resulting in companies/mixed partnerships not being required to submit an ATED return to HMRC.

ATED relief can be claimed in respect of the following:

• let to a third party on a commercial basis and isn’t, 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, and
• owned by a registered provider of social housing.

Entities exempt for the purposes of ATED:

• charitable companies using the dwelling for charitable purposes,
• public bodies, and
• bodies established for national purposes.

Please note, if you think may be able to claim relief from ATED in respect of your property/properties, we thoroughly recommend you seek professional advice.

Revaluation

ATED rules for UK residential properties require a property valuation every five years.

The ATED return for the tax year 2024/25 must be prepared and submitted using the property values as of 1 April 2022. This 1 April 2022 valuation date will apply from 2023/24 for the next five years, up till 2027/28 ATED year.

We are aware that post-Brexit the property market was extremely volatile; therefore, property prices may have shifted. Some properties may have increased/decreased in value since 1 April 2017, and therefore may move to a higher/lower ATED band, which will affect the ATED charge. Properties that were previously valued below the £500,000 ATED requirement may now fall within the ATED scheme as their value has increased.

It’s not necessary for you to have obtained a professional valuation. A valuation from a surveyor or from an estate agent is sufficient, to be able to complete the return.

Any valuation that you provide is your responsibility and if there is a material difference in the valuation that results in an underpayment of tax, you will need to pay the additional tax for this and if necessary any earlier or later years. You might also be liable to interest and penalties on the amount of tax underpaid.

Penalties

HMRC will charge penalties in respect of the late submission of ATED returns (even when there is full relief available) and also for late payments.

Should you have any queries, or would like support regarding ATED, you can contact a member of the Tax team using the form below.