Annual Tax on Enveloped Dwellings (ATED) was introduced on 1 April 2013 and whilst it has been with us for several years now there remain a lot of people who are still not aware that ATED has mandatory filing requirements.
Ian Orgill, Director at CHW Accountants in Bolton explains what the tax is, what you need to pay and what the filing requirements are.
ATED is an annual tax payable mainly by companies which owned UK residential property valued at in excess of £500,000 at the start of the tax year.
The ATED charge is calculated based on a banding system depending on the value of the property and ATED returns must be submitted in April each year for the fiscal year in advance.
So, for 2020/2021, ATED returns and any ATED due must be submitted and paid over to HMRC by 30 April 2020.
The amount of ATED due if the UK residential property is valued between £500k and £1m is £3,650 and if the value is more than £20m the ATED due is in excess of £232k.
You can work out the value yourself or you can use a professional valuer. The valuation of the property must be in pounds sterling.
Valuations must be on an open-market willing buyer, willing seller basis and be for a specific amount. The valuation date you need to use depends on when you owned the property.
The valuation dates are:
The value of the property for any chargeable period is the later of its initial valuation date and the revaluation date.
If you acquire a UK dwelling during the year worth more than £500,000 or incur expenditure on a property already owned, which results in its value increasing above £500,000, these properties will also be caught by the ATED rules.
Likewise, if you dispose of a property which was the subject of an ATED charge, you will need to submit an amended return during the year to reclaim part of the ATED charge already paid.
So, the ATED charge must still be paid up front and in full, even if you the property will be sold after 30 April.
There are several reliefs available that can eliminate or reduce the Annual Tax on Enveloped Dwellings charge. For example you may be able to claim relief for the property if it is:
There are a number of exemptions from Annual Tax on Enveloped Dwellings:
If you meet the conditions for an exemption, you don’t need to file a return.
All companies owning residential property worth more than £500k must submit either the ATED return or submit a claim for relief unless they are exempt.
This article is only a brief summary of the ATED basics to consider when reviewing your property portfolio ahead of the 30 April 2020 filing deadline. However, the rules can be complicated and for further advice get in touch.
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