By Jamie McKenna
To the uninitiated, the Annual Tax on Enveloped Dwellings (“ATED”) is a tax charged on a non-natural person which holds an interest in high value UK residential property.
Originally implemented on 1 April 2013, regime has become more relevant than ever due to the reduction of the lower entry limit and the recent growth in property values, particularly in the capital.
Many corporate entities previously unaffected by the charge will now fall into this lower bracket, and as a result will need to consider the cost of the tax, the accompanying registration process and the ongoing valuation and administrative burdens going forwards.
By way of recap, non-natural persons will need to consider applying for ATED if the property held is:
- a dwelling
- situated in the UK
- valued at £500,000 or over as at 1 April 2012
(For clarity non-natural persons equates to a company (unless acting as trustee), a partnership where one of the partners is a company or a unit trust).
The annual chargeable amounts with effect from 1 April 2016 – 31 March 2017 are as follows:
| Property Value | Annual Charge |
| More than £500,000 but not more than £1 million | £3,500 |
| More than £1 million but not more than £2 million | £7,000 |
| More than £2 million but not more than £5 million | £23,350 |
| More than £5 million but not more than £10 million | £54,450 |
| More than £10 million but not more than £20 million | £109,050 |
| More than £20 million | £218,200 |
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(Property valuations as at 1 April 2012, or at acquisition if later, and ongoing at 5 yearly intervals.)
Both the filing and payment deadlines are 30 April, following the year of assessment.
There are limited reliefs available to the above, specifically for:
- Property let out to individuals on a commercial basis*
- Dwellings held for charitable purposes, development or trading
- Working farmhouses, Historic houses open to the public or dwellings available for occupation by certain employees
* Non-qualifying individuals include anyone who is related, even by marriage, to the ultimate beneficial owner. The ATED charge applies if the property is rented out to a non-qualifying individual, even if it was occupied at full market rent, and ATED is apportioned from the point the property was last let to a ‘qualifying individual’ until the property is next let to a qualifying person.
With the deadline for submission fast approaching, now is the ideal time to review your residential properties and plan the best way forwards.
If you would like to learn more about ATED, or how it might affect you please call James McKenna on 01624 626586 or email [email protected]
Peregrine Corporate Services Limited is licensed by the Isle of Man Financial Services Authority.
The above information is meant as a guide only and is taken from information released by HMRC. This information should not be used as a sole basis for determining a tax liability or strategy. Specific advice for circumstances should