ATED, or Annual Tax on Enveloped Dwellings, is a UK property tax paid by companies that own residential properties valued over £500,000. It applies per property and is aimed at discouraging ownership through corporate structures to reduce taxes like Stamp Duty.
What is ATED?
ATED applies to individual UK residential properties owned by companies, partnerships with corporate partners, or collective investment schemes. Properties include flats and houses – and also include the grounds and gardens of properties.
Not all residential buildings are subject to ATED however: boarding schools, hotels, hospitals, student accommodation and some other types are exempt. See HMRC’s ATED guidance for a full list of exempt properties.
Why ATED Matters
ATED is complex and easy to overlook. High-value residential purchases by companies carry ATED liability, and failing to account for it can significantly affect your investment. Black Brick can refer you to leading tax specialists to ensure compliance and optimise your investment strategy.
Valuations and Rates
ATED is charged based on the valuation band your property falls into. You must obtain an accurate open-market valuation for each affected property, based on a ‘willing buyer, willing seller’ approach, and revalue the property every five years. You can find guidance on how to value your property for ATED on the HMRC website.
Reliefs may apply in certain cases – for example, if the property is part of a lettings business or falls into one of the categories listed by HMRC (see below). These rules are complex, though, so it’s worth checking with a specialist tax adviser. Again, Black Brick can connect you with trusted advisers to ensure your property is structured efficiently.
| Property Value | Annual Charge |
|---|---|
| More than £500,000 up to £1 million | £4,450 |
| More than £1 million up to £2 million | £9,150 |
| More than £2 million up to £5 million | £31,050 |
| More than £5 million up to £10 million | £72,700 |
| More than £10 million up to £20 million | £145,950 |
| More than £20 million | £292,350 |
If your property valuation is close to a band threshold (within 10%), you can ask HMRC to check which band it should fall into using a Pre-Return Banding Check. This helps avoid penalties if there’s any uncertainty over your ATED charge.
Filing and Payment
ATED returns are usually filed online via the HMRC ATED service. Returns must be made within 30 days of acquiring a property, or by 30 April each year for ongoing liability (which is 30 days after the start of the chargeable period, 1 April). Payments can be made via online payment, Faster Payments, CHAPS, Bacs, or cheque – allowing for processing times. Late payments may incur penalties.
ATED Exemptions
Certain property types can claim ATED reliefs, including:
Exemptions are not automatic – you must submit a return to claim relief. Multiple properties under the same exemption category can be claimed on a single return.
Expert Support for ATED Planning
ATED adds an extra layer of tax planning, so it’s important to get specialist guidance. Black Brick can connect you with trusted tax advisers, help identify suitable properties, and manage your purchase from start to finish – ensuring everything is structured efficiently and nothing is left to chance.
Contact us today to learn more and make your investment process seamless.
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