TTR Barnes

ENSURE YOU MEET YOUR 2023/24 OBLIGATIONS FOR ANNUAL TAX ON ENVELOPED DWELLINGS (ATED)

If your company or partnership holds an interest in a residential property believed to be valued close to or over £500,000 as of the valuation date of 1^st April 2022 then you should ensure you meet any consequent ATED tax obligations by 30^th April 2023.  This involves valuing/revaluing your property as of the new valuation date and submitting all associated returns/paying any applicable taxes by the deadline, as well as checking if you are entitled to any relief. 

WHAT IS ATED (ANNUAL TAX ON ENVELOPED DWELLINGS) AND WHAT ARE YOUR OBLIGATIONS?

ATED is an annual tax that applies to any company or other non-natural person (including partnerships with corporate members) who owns an interest in a UK residential property valued at over £500,000.  This includes landlords, property developers and letting businesses.  The tax is applicable to any property that classes as a dwelling if all or part of it is used/could be used as a residence.  This includes flats, gardens and mixed-use property, with exclusions for properties such as guest houses, hotels and care homes.

The charge is based on the value of the property at a set date in time – (the current valuation date has been set at 1^st April 2022).  The amount of ATED tax paid then depends on the value of the property as of this date, with bands applying as per below.

ATED RELIEF

There are various ATED reliefs available, giving up to 100% relief on any tax payable. According to the latest guidance from HMRC, you may be able to claim relief for your property if it is:

• let to a third party on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner
• open to the public for at least 28 days a year
• being developed for resale by a property developer
• owned by a property trader as the stock of the business for the sole purpose of resale
• repossessed by a financial institution as a result of its business of lending money
• acquired under a regulated home reversion plan
• being used by a trading business to provide living accommodation to certain qualifying employees
• a farmhouse occupied by a farm worker or a former long-serving farm worker
• owned by a registered provider of social housing or a qualifying housing co-operative

You can find out more about ATED reliefs and exemptions here

WHAT IS CHANGING WITH ATED?

ATED rules dictate that properties must be revalued every 5 years (starting from 1^st April 2012).  The last valuation date was 1^st April 2017 but this is being replaced by the new key valuation date of 1^st April 2022.  The new valuation date must be used for this current tax year 2023/24 – meaning you must have revalued your property as of 1^st April 2022 and submitted any associated ATED tax returns and payments by 30^th April 2023.

HOW COULD THIS IMPACT YOU?

The new valuation date could mean that a property previously below the £500,000 threshold has increased in value and now triggers the ATED regime. Likewise, a previous ATED-qualifying property may now generate a higher ATED annual charge band.   Conversely, it could be the case that your property has decreased in value and is no longer within the thresholds of ATED (though this is less likely).

WHAT SHOULD YOU DO NOW?

If you have a residential property within a commercial ownership that you think will meet the ATED threshold, then you should arrange to have a valuation of your property as of 1^st April 2022 as soon as possible.   You can arrange this yourself or have a third-party valuer carry out the valuation.  In any instance the valuation must be in GBP and be based on an open-market basis, with appropriate evidence of the valuation retained. 

*Please note that you must complete returns for any properties acquired during the year within 30 days of acquisition and within 90 days of any newly-constructed properties becoming occupied/a dwelling for Council Tax purposes. 

All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article.