Annual Tax on Enveloped Dwellings (ATED)

ATED is an annual tax payable primarily by companies that own UK residential property valued at more than £500,000 at 1 April 2022 (or when purchased after 1 April 2022). 

It is an annual tax for UK Residential properties held by either a company, a partnership with a company member or a Collective Investment Scheme.

Important Things to Know

The next ATED reporting period runs from 1 April 2025 to 31 March 2026 and the online return must be filed by 30 April 2025.

Where a qualifying property is owned on 1 April 2025; an online annual return must be filed and the charge paid by 30 April 2025, as long as the property remains liable to ATED.

ATED is a fixed banded charge based on the 1 April 2022 valuation or purchase price: the higher the value of the property the greater the ATED charge.

What May Trigger ATED?

Here are some common situations that may trigger ATED:

• Property occupied by a non-qualifying person connected to the owner, even if paying market rent. Connected persons include direct relatives or owner’s spouse/civil partner’s relatives.
• Empty Rental Properties where the owner has shown to have taken reasonable steps to replace a tenant to avoid the charge. Newly acquired properties requiring refurbishment before letting may qualify for relief.

Are There Reliefs Available To Reduce ATED Charges?

• Property which is let to a 3rd party at a commercial rent and is not at any time let to a person connected to the owner(s).
• Property which is open to the public at least 28 days a year.
• Property owned by charitable companies, public bodies or for national purposes are also exempt.
• Property which is being developed for resale by a registered property developer or owned as stock awaiting resale by a property trader.
• Property owned by a registered provider of social housing.
• Property repossessed by a financial institution due to its business of lending money.

Note, whilst the above are exempt from the ATED charge, you are still required to file a return with HMRC confirming the exemption.

Have more questions? Chat with us...

Understanding ATED can be complex and technical and with a short reporting window, failure to register or late filing may carry penalties and interest charges. At Arnold Hill, we have the expertise to guide you through your ATED obligations, from filing returns to identifying potential reliefs.

Our team stays up to date with the latest requirements and are here to help you so you can feel confident every step of the way. Get in touch today to see how we can help you!

Justin Moore - Partner