Annual Tax on Enveloped Dwellings (ATED) - Update

Peter Goodman profile image

Peter Goodman, Partner

Peter joined Wilkins Kennedy in 1986 and was made a Partner of the firm the following year.

March 28, 2019

 

On 1 April 2013, the government introduced the Annual Tax on Enveloped Dwellings.

This originally applied to all UK residential properties worth over £2 million owned by companies, partnerships with one or more corporate members, and collective investment vehicles – all of which are referred to as non-natural persons (NNPs). 

From 1 April 2015, the ATED regime was extended to include all UK residential properties held by NNPs worth over £1 million.

From 1 April 2016, the ATED regime was further extended to include all UK residential properties held by NNPs worth over £500,000.

Overview

NNPs holding UK residential property worth over £500,000 need to submit a 2019/20 ATED Return and pay the 2019/20 ATED due (if applicable) for the chargeable period 1 April 2019 to 31 March 2020 by 30 April 2019. Penalties apply for both late submission and payment, with late-filing penalties applicable even if ATED is not due. Interest will also be charged on late paid ATED.

Valuation date

The original valuation date to determine the ATED charge was 1 April 2012 (or, if later, the date of acquisition) for ATED Returns between 2013/14 and 2017/18.    

However, the ATED regime requires five-yearly property revaluations. A new valuation date of 1 April 2017 (or, if later, the date of acquisition) was introduced from the 2018/19 chargeable period.

If not already obtained, it should be a matter of priority to obtain a 1 April 2017 valuation for properties falling within the ATED regime in advance of the 30 April 2019 submission deadline for 2019/20 ATED Returns.

Relief Declaration Returns

From 1 April 2015, NNPs that hold multiple properties eligible for ATED relief have been able to submit a single simplified Relief Declaration Return for all properties for which the same type of relief is claimed.

Exemptions / Reliefs

It may be possible to claim an exemption from the ATED charge if the NNP uses the property:

  • in a letting business
  • in a bona fide property development business
  • for charitable purposes
  • for public use on at least 28 days per annum
  • for certain company employees.

The first two points will only apply where they are carried out commercially and the properties are not available to (or occupied by) anyone connected with the owner.

Capital Gains

Up until 5 April 2019, NNPs disposing of UK residential property which had been liable to the ATED charge (at any point since April 2013) are also assessable to the ATED-related CGT charge. A rebasing to the property's market value as at 5 April 2013 (or when it first came into ATED, if later) is required to calculate the ATED-related CGT gain/(loss).

It is possible for a property to be subject to both ATED-related CGT and non-residents CGT. When both charges apply, ATED-related CGT takes precedence (at 28%), with remaining gains from 5 April 2015 onwards subject to non-residents CGT (at 20%).

From 6 April 2019, in respect of disposals of UK residential property within ATED, two important changes will apply - ATED-related CGT will be abolished and Non-resident NNPs will be assessable to corporation tax (rather than CGT) on the gain/(loss) following disposal.

Contact Us

If you would like to discuss this in further detail, please contact your usual Wilkins Kennedy contact or ask to speak with one of our property tax experts, who would be happy to assist.


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