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What landlords need to know about Annual Tax on Enveloped Dwellings (ATED)

Chris Littlewood BA (Hons), ACCA
Client Manager

Do you own residential property that’s valued close to or over £500k? If so, you’ll need to consider the upcoming fixed ATED revaluation date.

What is ATED?

ATED is a consideration for companies that own UK residential property valued at over £500,000. It is an annual tax for which the chargeable period runs from 1st of April to the following 31st of March.

Why do I need to know about ATED?

Even if your property is not currently over this amount you may need to consider valuing your property to find out if it would fall within the scope of ATED.

You will need to complete this action for all properties every 5 years due to the fixed revaluation dates. The next fixed revaluation date is the 1st of April 2022 and needs to be completed regardless of when the property was acquired.

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.

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 for the 1st April 2022 obligation?

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.

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.

What happens if one of my dwellings is valued at over £500,000?

If you are now in the scope of ATED, don’t worry as there are available exemptions and reliefs that could apply.

  • With a qualifying exemption, you have no ATED responsibility to meet.

  • With a qualifying relief, you may be reduced to filing a return each year with no tax obligations.

If you would like to discuss these with one of our tax advisors please book a consultation. Our clients enjoy four free tax consultations where such matters can easily be discussed.

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 2022/23 reporting period is due to be reported and tax paid by the 30th April 2022.

The Provestor software actively tracks property values recorded within it and will provide handy reminders of ATED and flag possible exposure.

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 valueAnnual charge
£500,000+ up to £1million£3,700
£1million+ up to £2million£7,500
£2million+ up to £5million£25,300
£5million+ up to £10million£59,100
£10million+ up to £20million£118,600

Need 121 advice?

If you’re unsure about your ATED obligations, we can help. Book a one-off property tax consultation with one of our expert property accountants for just £249.

Book now
Chris Littlewood BA (Hons), ACCA
Client Manager

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