ATED – are you prepared for the April deadline?

The deadline for filing ATED returns and paying any charge is 30 April 2017 for the period 1 April 2017 to 31 March 2018. 

The Annual Tax on Enveloped Dwellings (ATED) is an annual tax charge which can apply if a UK residential property is owned by a company or other non-natural person(s). A ‘non-natural person’ (NNP) is broadly a company or a partnership with one or more corporate partners.

A typical example is a company that owns residential property which it holds as an investment or trading stock. If the property is valued at more than £500,000 then the company is required to file an ATED return.

As the name suggests, ATED is an annual tax based on the value of the property and it applies to both UK and non-UK resident NNPs. The purpose of ATED is to counteract perceived tax avoidance in relation to UK properties owned in this way.

Certain reliefs for the charge are available, such as where the property is part of a property rental business. However, even when the relief reduces it to nil the owner is still required to file an ATED return. If a property is acquired during the year, i.e. between 1 April 2017 to 31 March 2018, an ATED return is still required to be filed and any charge paid within 30 days of the acquisition date.

The current ATED threshold of £500,000 relates to the property value at 1 April 2012 or acquisition if later. Additionally, under ATED rules properties must be revalued on 1 April 2017. While the new valuation does not need to be inserted onto the return until the period beginning on 1 April 2018, it is easier to consider the 1 April 2017 valuation at that point rather than at a later date.

When considering if the ATED charge is going to be an issue for you, or before dismissing it immediately, do bear in mind that where your property was previously outside the scope of ATED due to the value being too low, a revaluation could cause you to breach the threshold.

If you would like to discuss any of these issues further, please get in touch with our tax team on 01903 234094.