ATED Returns have you had a valuation of your property recently

21.04.2022

Business

If you own residential property in a Limited Company you might be in for a nasty surprise!

The Annual Tax on Enveloped Dwellings (ATED) was introduced in 2013 to make it less attractive to own high-value residential property through a company (or a partnership that consists of a corporate partner). Initially, it only applied to properties with a value in excess of £2m but subsequent changes to the legislation have brought this value down to £500k. 

ATED rules for UK residential properties require a property valuation every five years. The next date of re-valuation was 1 April 2022 and you will need to engage a surveyor or an estate agent to do this for you.  This new valuation will apply for the 2023/24 ATED Return.   

The 2022/23 ATED Return should be submitted by 30 April 2022 to avoid penalties being charged.   

The amount of tax payable annually is calculated using a band system based on the value of the enveloped property.  So, if the property was valued at £500,000 or more on 1 April 2017 (or if you acquired the property for £500,000 or more after 1 April 2017), the amount of tax payable on 30 April 2022 will be £3,800.  Although the value of the property is fixed for five years, the annual charge levied within each band is increased annually.  

You might have been below the radar in previous years but with recent increases in residential property values, the revaluation of your enveloped property on 1 April 2022 could notch you up a band.  For example, property owned since April 2017 which has sat comfortably in the first band for the last five years may, on revaluation this April, be pushed into the second band – this will result in the annual ATED charge more than doubling.    

Fortunately, there are a number of exemptions from ATED according to how the enveloped property is held, for example of the property is held as...

• Part of a commercial rental or trading business,  
• Part of trading stock in a property development business,  
• Accommodation for an employee to occupy (needless to say the employee may have a benefit in kind charge on its value instead), or 
• A farmhouse.   

Nevertheless, reliefs are not automatic and must be claimed by completing an annual ATED return.    

If you need help completing your ATED Return to claim reliefs or would like advice on how the revaluation will affect your annual charge, please contact CKLG on 01223 810100.