The Annual Tax on Enveloped Dwellings (“ATED”) is a property tax that applies to companies, trusts and partnerships (where any of the partners is a company) that own UK residential property. The tax for the next five years will be based on a valuation as at 1 April 2022, and this valuation must be filed by 30 April 2023.

What is ATED?

If a company, trust or partnership owns UK residential property, it may be within the scope of ATED. ATED will apply where the value of the property is £500,000 or more.

If this is the case, an ATED return must be submitted each year by 30 April.

Does this apply to me?

If you do not own property via a corporate, trust or partnership vehicle, this will not apply to you.

If you do own UK residential property via a company, trust or partnership, you may be within the ATED regime and required to file a return annually.

If a residential property with a value of £500,000+ is held by a company/trust/partnership on 1 April*, an ATED return is due by 30 April.
An ATED tax charge is payable based on the property value, unless relief is applicable (see below regarding the tax charge payable).
The most common reliefs are available where:
a) the property is let to a third party on a commercial basis,
b) the property is being developed by a property developer for resale.
Regardless of whether relief is available from the ATED charge, an ATED return will still need to be filed.

* If a property is acquired during the year (i.e. after 1 April) for £500,000+, then an ATED return must be filed within 30 days of acquisition.

What valuation is required?

For the purposes of the ATED return, properties must be revalued every five years.
Valuations are on an open market willing buyer, willing seller basis. A valuation must be a specific amount in pounds sterling.
The last revaluation date was 1 April 2017, and this is the value used for ATED returns to be submitted between April 2018 and April 2022 (unless the property was acquired after 1 April 2017, in which case the acquisition value is the relevant value for ATED purposes).
If the property was worth £500,000 or more on 1 April 2017 (or at acquisition if after 1 April 2017), the ATED rules will apply, with returns due in 2018-2022 inclusive.
1 April 2022 was the next revaluation date and will be used for the returns to be submitted from April 2023 to April 2028.
If a valuation as at 1 April 2022 confirms the property is worth £500,000 or more, ATED returns must be filed from April 2023 to April 2028 inclusive.

What you will need to pay

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

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

What do I need to do?

If you think the above applies to you or if you have any questions, please contact us and we will be happy to assist.

So that we can prepare for next year’s filings (April 2023), if you do hold a property within a corporate, trust or partnership entity, we recommend you obtain a valuation of the property as at 1 April 2022.

This will confirm whether you are within the scope of ATED, and hence if you will need to file a return in April 2023.

You may find your property is within the ATED for the first time from April 2023 if it has increased in value to more than £500,000 since the previous valuation date of April 2017.

If you have any queries relating to the ATED, please contact Michael Graham at michael@sandersgroup.co.uk.

Please note, the content of this article is for information purposes only and should not be relied upon as formal advice.

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