The Annual Tax on Enveloped Dwellings (ATED) is a yearly charge that applies to high-value UK properties owned or partly owned by certain non-natural persons, such as companies, partnerships with a corporate member and collective investment schemes.
Firstly, an enveloped dwelling refers to a property owned by a company rather than an individual. A dwelling refers to a property that is used, partly used or could be used as a residence, for example, a house or flat. It includes any gardens, grounds and buildings within them.
ATED was introduced as part of the Finance Act 2013. It aimed to increase HMRC revenue and level the playing field between individual property owners who compete with companies that take advantage of their size and tax benefits.
The introduction explains that ATED only applies to certain non-natural persons (i.e. an entity that is not an individual human being) and corporate structures. Therefore, individuals, trusts or other non-corporate entities will be exempt from ATED. The tax begins when a property reaches a value over £500,000 and has variable rates from there on. HMRC uses the property's open market value on 01 April 2021 or the date it became chargeable, whichever is later. A new valuation must be done every five years or when there is a change in ownership.
The ATED rates for the period 01 April 2022 to 31 March 2023 are:
Property Value | Annual Charge |
More than £500,00 up to £1 million | £3,800 |
More than £1 million up to £2 million | £7,700 |
More than £2 million up to £5 million | £26,050 |
More than £5 million up to £10 million | £60,900 |
More than £10 million up to £20 million | £122,250 |
More than £20 million | £244,750 |
The ATED rates for the period 01 April 2023 to 31 March 2024 are:
Property Value. | Annual Charge. |
More than £500,00 up to £1 million | £4,150 |
More than £1 million up to £2 million | £8,450 |
More than £2 million up to £5 million | £28,650 |
More than £5 million up to £10 million | £67,050 |
More than £10 million up to £20 million | £134,550 |
More than £20 million | £269,450 |
ATED returns are for owners of enveloped dwellings and are separate returns that must be filed and paid by 30 April annually. There are exemptions and reliefs that are available under ATED, such as relief for business properties, charity relief and agricultural relief.
The interest penalties for late filing and late payment are as follows:
Late Filing | Late Payment | Penalties |
Missed Filing Deadline | £100 | |
| 30 Days Late | 5% of the tax due |
3 Months Late | | £10 per day up to 90 days |
6 Months Late | | 5% of tax due or £300 (whichever is greater) |
| 6 Months Late | 5% of tax outstanding at that date |
12 Months late | | Greater of 5% or £300, unless the taxpayer is found to be deliberately withholding information |
| 12 Months Late | 5% of tax outstanding at that date |
If the taxpayer is found to be deliberately withholding information that would enable HMRC to assess the tax due, then the new penalties are structured as so:
deliberate and concealed withholding = 100% of tax due or £300 if greater.
deliberate but not concealed = 70% of tax due or £300 if greater.
As HMRC have the power to enforce compliance with tax laws, there are other courses of action available; legal action and enforcement of the debt are entirely possible, so you should know the importance of correctly paying on time cannot be underestimated.
To be as safe and as stress-free as possible, it's important that all records are well-kept and you seek out professionals to help you through the process. With that in mind, don't hesitate to contact Short and Sons Accountants for your accounting needs.