Business tax – guidance

Annual Tax on Enveloped Dwellings

Find out about Annual Tax on Enveloped Dwellings (ATED), what you need to pay and how to appoint an agent or adviser to act on your behalf.

Overview

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £1 million.

You’ll need to complete an ATED return if your property:

  • is a dwelling
  • is in the UK
  • was valued at more than £2 million on 1 April 2012, or at acquisition, if later, for returns from 2013 to 2014 onwards
  • was valued at more than £1 million on 1 April 2012, or at acquisition, if later, for returns from 2015 to 2016 onwards
  • is owned completely or partly by a
    • company
    • partnership where one of the partners is a company
    • ­collective investment scheme - for example a unit trust or an open ended investment vehicle

There are reliefs and exemptions from the tax, which may mean you don’t have to pay.

Meaning of ‘dwelling’

Your property will be a dwelling if all or part of it is used, or could be used as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.

Find out about valuing different types of properties for example mixed use, more than one dwelling and multiple interest properties.

Some properties aren’t classed as dwellings. These include:

  • hotels
  • guest houses
  • boarding school accommodation
  • hospitals
  • student halls of residence
  • military accommodation
  • care homes
  • prisons

Section 19 of the ATED technical guidance explains more about the meaning of ‘dwelling’.

Value your property

To work out what you need to pay you’ll need to value your property.

In some circumstances you can also ask HM Revenue and Customs (HMRC) for a Pre-Return Banding Check (PRBC).

What you need to pay

The amount you’ll need to pay is worked out using a banding system based on the value of your property.

Chargeable amounts for 1 April 2015 to 31 March 2016

Property value Annual charge
More than £1 million but not more than £2 million £7,000
More than £2 million but not more than £5 million £23,350
More than £5 million but not more than £10 million £54,450
More than £10 million but not more than £20 million £109,050
More than £20 million £218,200

From 1 April 2016 there will be a further band for properties valued between £500,000 and £1 million. This will have an annual charge of £3,500.

Chargeable amounts for chargeable period 1 April 2014 to 31 March 2015

Property value Annual charge
More than £2 million but not more than £5 million £15,400
More than £5 million but not more than £10 million £35,900
More than £10 million but not more than £20 million £71,850
More than £20 million £143,750

Chargeable amounts for chargeable period 1 April 2013 to 31 March 2014

Property value Annual charge
More than £2 million but not more than £5 million £15,000
More than £5 million but not more than £10 million £35,000
More than £10 million but not more than £20 million £70,000
More than £20 million £140,000

Section 6 and 7 of the ATED technical guidance tells you more about how to work out the charge if:

  • you only own the dwelling for part of a year
  • you change how you use the property, so that it moves into or out of the scope of ATED
  • you claim a relief for part of the year

When you buy your property you may also have to pay Stamp Duty Land Tax. There’s a higher rate for corporate bodies.

If you sell your property you may also have to pay ATED-related Capital Gains Tax.

Submit your return and pay

If you need to pay ATED on your property, you’ll need to complete and send HMRC a return and pay anything you owe.

If your tax due is nil you can submit a relief declaration return to claim relief.

Appoint a tax agent or adviser

You can deal directly with HMRC or appoint someone to act on your behalf, complete an ATED 1 form.

HMRC form 64-8 (authorising your agent) doesn’t cover ATED.