Do you have an obligation to file an Annual Tax on Enveloped Dwellings (ATED) return by 30 April 2022?

What is ATED?

ATED is an annual tax payable in advance by companies and other non-natural persons (including partnerships with corporate members) who own an interest in UK residential property valued at over £500,000.

The charge applies to houses, self-contained flats, gardens and mixed-use properties. Certain properties such as hotels, guest houses and care homes are specifically excluded.

ATED also extends to property developers and letting businesses but there are reliefs available to reduce the ATED charge to nil. For example, a claim for relief can be made where a property is rented on a commercial basis to an unconnected party. It is important to note that the claim for relief is not automatic and a Relief Declaration Return must be submitted to HMRC in order to make the claim.

What are my compliance obligations?

ATED returns are required for the period to 31 March each year. The current period runs from 1 April 2022 to 31 March 2023. The return must be submitted to HMRC by 30 April 2022. Any tax payable is also due by this date.

How much is the ATED charge?

The charges for ATED are based on the property value, and will depend on which valuation band your property falls into. The valuation of the property for the 1 April 2022 to 31 March 2023 ATED return period is based on the open market value at 1 April 2017, or the value at the date of acquisition, if later.

Property Value	2022/23
£500,001 – £1,000,000	£3,800
£1,000,001 – £2,000,000	£7,700
£2,000,001 – £5,000,000	£26,050
£5,000,0001 – £10,000,000	£60,900
£10,000,001 – £20,000,000	£122,250
Exceeding £20,000,000	£244,750

 

Failure to comply with ATED reporting and payment requirements can attract significant penalties.

Future changes

A new valuation will be required at 1 April 2022 for the next five chargeable periods starting from 1 April 2023. For properties acquired post-1 April 2022, the valuation on the acquisition date will be used.

With property valuations in some areas of the country having increased since the last valuation date of 1 April 2017, it is possible that a property which was previously outside the scope of ATED is now subject to the ATED charge. Similarly, you may find your property has decreased in value and is no longer within the scope of ATED. It is therefore recommended that companies seek a valuation of existing residential properties as of 1 April 2022, or as close to this as is practicable, to ensure advance awareness of any new or increased payments.

Pre-Return Banding Check (PRBC)

Where the value of a residential dwelling falls within 10% of an ATED threshold, HMRC can be asked to carry out a PRBC. This is a request for confirmation that HMRC agree with the ATED band the property falls within. Please note that PRBCs in relation to the 1 April 2022 valuation date should be submitted well in advance of April 2023 to ensure sufficient time for HMRC’s response.

How can AAB assist me?

We can advise on ATED for those affected, we can also prepare and arrange submission of ATED returns. In addition, we can complete PRBCs and submit these to HMRC.

If you have any queries or would like further information on ATED, please do not hesitate to contact Michaela McCombie or your usual AAB contact.