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Annual tax on enveloped dwellings (ATED) tax charge

Date posted: 2nd Mar 2018

Annual tax on enveloped dwellings (ATED) tax charge – Who’s affected?

An entity is liable to pay the ATED tax charge if it is a non-natural person (NNP) and owns a UK residential property valued at more than £500,000.

A NNP could be a company, a partnership with a corporate partner or a collective investment trust. The NNP does not necessarily have to be a UK entity.

Below shows the ATED tax charge that is payable by the NNP:

Property value and annual charge:

  • More than £500,000 – but not more than £1 million, charge – £3,500
  • More than £1 million – but not more than £2 million, charge – £7,050
  • More than £2 million – but not more than £5 million, charge – £23,550
  • More than £5 million – but not more than £10 million, charge – £54,950
  • More than £10 million – but not more than £20 million, charge – £110,100
  • More than £20 million – charge – £220,350

The ATED tax year starts on 1 April and runs to 31 March each year and companies must file a return for the year if they hold residential property that would give rise to an ATED tax charge.

The deadline for submitting the return is 30 April so there is only a short window to file the return.

Whilst the ATED regime has been around for a number of years, properties may need to be revalued to ascertain whether they fall into the tax charge.

There are some exemptions from the charge, including, where the property is:

  • let to a third party on a commercial basis and isn’t at any time, used or available for use, 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 as stock by a property trader for resale

However, a return still needs to be made, to claim the exemption.

If you are concerned that you may be liable to an ATED charge, please call our tax team for further advice.


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