Annual Tax on Enveloped Dwellings (ATED)
ATED is an annual return and a charge on companies and certain other entities who own dwellings. This is required at the point of purchasing a house worth over £500k, and then every year after.
Various conditions are detailed below, along with reliefs which will prevent most businesses from needing to pay anything.
Vitally however, every business which owns these properties needs to do an ATED return, even if there is no charge to pay.
A small amount of businesses pay ATED, but many more need to file a return and very often receive penalties when they fail to do so.
ATED applies to companies and partnerships in which a member is a company and collective investments schemes such as a unit trust or an open ended investment vehicle. For specifics on this, contact us to learn more.
Value
ATED only applies to dwellings worth more than £500k. Properties worth less than £500k are exempt, meaning no return is required and no charge is payable. Each property is assessed individually.
This means that a company owning 3 Wembley flats worth 600k each should file 3 ATED returns. A company owning 10 houses in Bolton worth 200k each is outside ATED entirely.
The ATED charge depends on the value of each property. The table at the bottom of the page shows how this increases with the house price.
Returns
An ATED return should be filed with HMRC within 30 days of buying a house. A return is then also required every year by 30th April, reporting each house the business owned on 1st April.
Example Ltd purchase a house on 1st September 2016 and files an ATED return by 30th September.
If the house is still owned on 1st April 2017, then another return would be required by 30th April 2017. This is probably the shortest filing period for any tax!
Relief
There are many reliefs with ATED. The most commonly applicable are reliefs for rental properties and businesses who develop houses for sale.
It is very important to note that a business still needs to make an ATED return on buying a rental property, although no charge will be made.
This is a Relief Declaration Return and late filing is penalised just as if there was tax to pay.
Penalties
ATED uses the self-assessment penalty regime. A late return has £100 penalty immediately applied, with further fixed charges stacking up after 3 months, 6 months, up to a maximum of £1,600 at the 12 months mark.
How to Submit Returns
ATED returns should be submitted online. It is quick and easy to register for ATED and appoint an agent.
The return itself is then filed by yourself or by your agent, declaring the address of each property and the amount payable.
A payment reference number is supplied by HMRC and payment can be made straight away. You may need to file an ATED return and you’re not alone.
Contact Wisteria’s tax team at 020 8429 9245 and we can get started on this right away.