Changes to ATED – are you now liable for a tax bill?

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Tim Collerton, Partner

Tim is Managing Partner of the Bourne End office and has over 30 years’ experience in accountancy, having trained in commerce before moving to a practice environment.

March 3, 2017


The season for ATED returns is nearly upon us and if this applies to you then no doubt you will soon be busy with preparations. It might also be a good time to familiarise yourself with some recent updates in relation to ATED charges. Property worth between £500,000 and £1 million are now in the scheme and are subject to tax, where as previously there would have been zero liability. If this applies to you, then you might want to listen in.

The Annual Tax on Enveloped Dwellings (ATED) is applied to UK residential property that is owned either fully or in part by a company, partnership or collective investment scheme and is worth more than £500,000. It includes any grounds that make up part of that property, such as parking spaces or gardens and any buildings within them. Some properties are excluded, because they are not recognised as “dwellings” by HMRC and some tax relief is available in certain circumstances. But, in order to benefit from those reliefs you will still need to file an ATED return.

What has changed?

Until April 2016, if your property was worth between £500,000 and £1 million, then you were not liable to pay ATED. However, from April 2016, HMRC introduced a new band of charging that included this lower bracket – so those who were previously paying no ATED on their properties will now find that they are.

If this applies to you and you are currently filing your return, then you will be subject to a tax bill. If you own such property as of 1 April 2017, your return must be submitted by 30th April 2017.

Start planning now

Properties are due to be revalued every 5 years and the next revaluation is 2017. It is therefore advisable that if your property is close to a banding then a valuation is carried out to ensure the right amount of tax is paid.

Remember, you could be charged a penalty if you don’t file your ATED return on time, and/or if your return contains inaccuracies.

If you would like some further advice relating to ATED returns, or you would like more information about how the changes in ATED thresholds could affect you, then please contact your local Wilkins Kennedy representative.


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