What landlords need to know about Annual Tax on Enveloped Dwellings (ATED)
Does your limited company own residential property that’s valued close to or over £500k? If so, you’ll need to meet your ATED reporting requirements for the 2024/25 year by 30 April.
What is ATED?
Annual Tax on Enveloped Dwellings (ATED) is a tax for companies that own UK residential property valued over £500,000. The chargeable period runs from 1st of April to the following 31st of March.
What do landlords need to do?
If your property is valued over £500,000 it will be in scope for ATED. You’ll need to file your return and apply for any reliefs by 30th April 2024.
Check if you qualify for any reliefs
The good news is that most property investors renting out their residential properties at a market rate will qualify for letting business relief. This means that no ATED is payable, but a return will still need to be submitted.
However, be aware that your property may not qualify for relief, if offered out to family members at non-commercial rates, such as the use of a Furnished Holiday Let.
In these circumstances, ATED may become chargeable based on the value of the property.
You'll need the following information for submission:
Property address
Property value
Property title number
Landlords letting out a property on a commercial basis can benefit from one of the reliefs available. This means that no ATED is payable, but a return will still need to be submitted.
What if the property is not just a single residential dwelling?
If your property is of mixed-use, such as a flat above a shop, then only revalue the residential part, not the shop.
If your property has more than one dwelling, such as a building with several self-contained flats, each flat would be a dwelling and should be valued separately.
Properties with multiple dwellings that are connected with internal access between them would still count as a single dwelling, such as Houses of Multiple Occupancy (HMOs).
Adjoining buildings with internal access would count as a single dwelling also, such as an annexe joined to the main property with internal access.
How do I manage ongoing ATED responsibilities?
If you are acquiring property within the scope of ATED, a return and payment of any tax would be due within 30 days of the purchase.
For existing properties, ongoing filing and tax payments are due by the 30th of April. The 2024/25 reporting period is due to be reported and tax paid by the 30th April 2024.
The Provestor software actively tracks property values recorded within it and will provide handy reminders of ATED and flag possible exposure.
Need 121 advice on ATED?
How much would ATED cost me?
This depends on the value of the building and any entitlement to exemptions or reliefs. Tax is banded and the chargeable amounts for the current year are:
| Property value | Annual charge |
|---|---|
| £500,000+ up to £1million | £4,400 |
| £1million+ up to £2million | £9,000 |
| £2million+ up to £5million | £30,550 |
| £5million+ up to £10million | £71,500 |
| £10million+ up to £20million | £143,550 |
| £20million+ | £287,500 |
ATED valuation
You must revalue your property every 5 years in line with ATED legislation. The 2023 to 2024 chargeable period is a revaluation year.
If you acquired a property:
on or before 1 April 2022 — use 1 April 2022 as the revaluation date
after 1 April 2022 — use the date you acquired it as the valuation date
ATED fixed revaluation
There are revaluation dates every 5 years and you may need to consider valuing your property to find out if its current market value falls within the scope of ATED.
The last fixed revaluation date was the 1st of April 2022.
Who needs to revalue?
Any company that owns, even in part, a dwelling within the UK. A property will be classed as a dwelling if all or part of it is used or could be used as a residence.
Certain properties would not be classed as dwellings and would be out of the scope of ATED. However, these do not generally apply to BTL or FHL property investors, please see further information on exemptions here.
How do I revalue my properties?
This can be done by yourself or through professional valuers but any valuation must be completed in £GBP.
Valuation must be on an open-market basis. If the property is leasehold please ensure the right valuation is undertaken, this may be best handled by a third party valuer.
If you are valuing the property yourself, ensure you retain sufficient evidence to support your valuation at that time, such as screenshots from Rightmove/Zoopla etc.
If you have a property surveyor value the property, retain their valuation for your records.
Online valuation services are available such as Hometrack for a fixed fee per property.
Tip: The cost of revaluation for ATED is deductible for Corporation Tax purposes and can be claimed as a revenue expense.
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