The annual tax on enveloped dwellings (ATED) is payable where high value residential property is held within an ‘envelope’, such as a limited company. The charge applies if a dwelling in the UK that is valued at more than £500,000 is owned, or partly owned, by:
- a company;
- a partnership where at least one of the partners is a company; or
- a collective investment scheme, such as a unit trust or an open-ended investment vehicle.
Qualifying property rental business
Relief is available in various situations, including where there is a qualifying rental business.
- the business must be a property rental business; and
- it must be carried out on a commercial basis with a view to profit.
The property must be let to a third party, and not occupied by an owner.
If it is not currently generating receipts, all is not lost – relief remains available if steps are being taken to use the property to generate an income without delay, such as advertising for a tenant.
Relief, however, is not available if the property is held in a company which is not a qualifying property rental business (for example, a trading company), even if it is let commercially.
Amount of the charge
Where relief or an exemption is not available, an annual charge applies based on the value of the property at the relevant valuation date. For 2021/22 the charges are as follows:
|Value of property||Annual charge|
|More than £500,000 up to £1 million||£3,700|
|More than £1 million up to £2 million||£7,500|
|More than £2 million up to £5 million||£23,500|
|More than £5 million up to £10 million||£59,100|
|More than £10 million up to £20 million||£118,600|
|More than £20 million||£237,400|
The charge period runs from 1 April 2021 to 31 March 2022. Where a property within the charge to ATED is held on 1 April 2021, the tax must be paid by 30 April 2021. Where a property is acquired after that date, the tax is payable within 30 days of the date on which the property came within the charge to ATED.
An ATED return for 2021/22 must be filed online by 30 April 2021 using the ATED Online Service where the property is held on 1 April. Where the property is acquired in the year, the deadline is 30 days from the date on which the property comes into charge.
If relief is available, for example, for a qualifying rental business, a Relief Declaration Return should be submitted instead. Again, this can be done using the ATED Online Service.
Partner note: FA 2013, Pt. 3 (aa. 94 – 174 and Sch. 33, 34 and 35); the Annual tax on Enveloped Dwellings (Returns) Regulations 2013 (SI 2013/1844)