Does your company own UK residential property valued at £500,000 or more? You could be subject to ATED and time is running out for submitting your return.
We are very busy answering back to all queries from our clients and their accountants for their ATED position and time is running out as an annual return must be submitted by 30th of April 2018.
ATED was first introduced back in 2013 and it stands for Annual Tax on Enveloped Dwellings. It is an annual tax payable mainly by companies (both onshore and offshore) which are valued more than £500,000.
The ATED regime also applies to:
- A partnership with corporate members
- A collective investment scheme such as a unit trust or open-ended investment
If a property falls within ATED, an annual return must be submitted to HMRC along with the tax payment. The return for the period from 1 April 2018 to 31 March 2019 is based on property valued on 1 April 2017 (or the purchase price if acquired later). The ATED return for this period is due by 30 April 2018.
The great news is that there are some reliefs for the majority of our clients against the ATED charge. However even if you are eligible for one of these reliefs and there is no tax payable, you must still submit a return and make a claim for the relief by completing a Relief Declaration Return – ask your accountant who will be able to do this for you. These returns can be completed and submitted online if you would like to do it by yourself by visiting – https://www.gov.uk/guidance/register-for-the-annual-tax-on-enveloped-dwellings-online-service
In order to claim a relief against ATED, the property must be either:
- Let to a third party on a commercial basis and not occupied or available for occupation by anyone connected with the owner at any time.
- Being developed by a property developer for resale
- Open to the public for at least 28 days a year on a commercial basis i.e. stately homes
- Owned by a property trader as the stock of the business or for the sole purpose of resale;
- Repossessed by a financial institution as a result of its business of lending money e.g. equity release schemes;
- Used by a trading business to provide living accommodation to employees, where the employee has less than 10% interest in the company e.g. key executives working in the UK;
- A farmhouse occupied by a farm worker or a former long-serving farm worker;
- Owned by a registered provider of social housing.
The ATED bands and chargeable amounts for the 2017/18 ATED year are set out in the below table:
|Property value bands based on the last valuation date||Annual chargeable amount for 2017 to 2018|
|More than £500,000 but not more than £1 million||£3,500|
|More than £1 million but not more than £2 million||£7,050|
|More than £2 million but not more than £5 million||£23,550|
|More than £5 million but not more than £10 million||£54,950|
|More than £10 million but not more than £20 million||£110,100|
|More than £20 million||£220,350|
The property value to be used is NOT its current value of today. The value as of 1st April 2017 (or purchase price, if purchased after that date) should be used for the five years from 1st April 2018.
Let the London Executive team value your home or work out the value of the property yourself, but evidence should be kept. A return to HMRC must be submitted by 30th April of each relevant tax year, along with any payment due. (So unlike most taxes, this is a ‘payment in advance’ procedure).
If relief is being sought a Relief Declaration Return must be submitted by your accountant.
Still confused? Why don’t you give us a call on 020 7048 0400 and we will be happy to help.