Annual tax on enveloped dwellings (ATED) changes

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What is the annual tax on enveloped dwellings?

The annual tax on enveloped dwellings (ATED) was introduced as part of a package of measures aimed at making it less attractive to hold high-value UK residential property indirectly, e.g. through a company, in order to avoid or minimise taxes such as stamp duty land tax (SDLT) on a subsequent disposal of the property.

ATED is payable by companies that own UK residential property valued at a certain amount.

For chargeable periods 1 April 2016 to 31 March 2017 onwards there is a new band for properties valued at more than £500,000 but less than £1M.

If the ATED applies to any of your properties you will need to submit a return each year otherwise you might have to pay a penalty and interest.

A Return needs to be submitted:

  • By 30 April 2016 if you have a property that falls within the scope of ATED on 1 April 2016.
  • Within 30 days of acquisition if your property comes within the scope of ATED after 1 April 2016
  • For a newly built property within 90 days of the earliest of the date your property becomes a dwelling for Council tax purposes or the date it is first occupied

You can submit your ATED return online and if you own more than one such property you will need to complete an ATED return for each property.

Please contact Sue Stephens or John Elliott, Tax Partners, if you need assistance or for further information.