If you own residential property as an investment or as a trading business, then you need to be aware of this tax, especially of the property is itself of high value or if it’s in an area where property values overall are high.

Although ATED originally affected only properties valued at more than £2 million, this threshold was first reduced to £1 million and now applies to properties worth £500,000 on 1 April 2012 (or on acquisition of acquired after that date) for tax years 2016/17 onwards. This brings many more properties within the scope of ATED.

This is an annual charge and, even if you are entitled to tax relief, you may still need to complete an ATED return. Failure to do so will lead to a penalty.

You need to complete an ATED return if your property:

  • is a dwelling
  • is in the UK
  • was valued at more than £500,000 on 1 April 2012 or at acquisition if later
  • is owned completely or partly by a:
    • company
    • partnership where one of the partners is a company
    • collective investment scheme – for example a unit trust or an open-ended investment vehicle

ATED RATES

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     £7,050
More than £2 million but not more than £5 million   £23,550
More than £5 million but not more than £10 million   £54,950
More than £10 million but not more than £20 million  £110,100
More than £20 million  £220,350


RELIEFS

You may be able to claim relief for your property if it is:

  • let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
  • open to the public for at least 28 days a year
  • being developed for resale by a property developer
  • owned by a property trader as the stock of the business for the sole purpose of resale
  • repossessed by a financial institution as a result of its business of lending money
  • acquired under a regulated Home Reversion Plan
  • being used by a trading business to provide living accommodation to certain qualifying employees
  • a farmhouse occupied by a farm worker or a former long-serving farm worker
  • owned by a registered provider of social housing

In addition there are a number of actual exemptions    – but none that are likely to be available to a property investor or trader!

RETURNS AND RELIEFS

If you have a claim to relief that reduces your ATED charge to nil, you can make a claim using a Relief Declaration Return for each relief you claim.

If you still have ATED to pay, you’ll have to complete an ATED return for each of your qualifying properties.

The return (or Relief Declaration Form) must be filed on or after 1 April for each year where there is qualifying property

If you meet the conditions for an exemption, you don’t need to file a return.

REMEMBER

  • This tax applies to all qualifying properties owned by a company   – even if you live in it yourself
  • The current threshold values are set at April 2012 (for properties owned on that date). Revaluation is a distinct possibility in the near future!