If you own a UK residential property through a company or other corporate entity then you may fall under the Annual Tax on Enveloped Dwellings (ATED) regime.
5 October 2020
ATED is an annual tax charge payable by ‘non-natural persons’, for example companies (both non-resident and UK resident), that own single UK dwellings with a ‘taxable value’ of £500,000 or more. The taxable value is:
- the market value on 1 April 2017, or
- cost if acquired subsequently, or
- (if later) its market value when at least £40,000 is either spent on improvements or realised on a part disposal.
An ATED return must be filed, and any tax due paid for the ensuing period to the following 31 March, within 30 days of 1 April (or of the date the property was acquired, if later).
ATED rates for 2020/21 are:
| Property taxable value | Annual tax |
| £500,000+ to £1m | £3,750 |
| £1m+ to £2m | £7,500 |
| £2m+ to £5m | £25,200 |
| £5m+ to £10m | £58,850 |
| £10m+ to £20m | £118,050 |
| over £20m | £236,250 |
Exemptions
There are many exemptions from ATED, but an annual tax return is still necessary in order to claim them. The most common exemption will apply to ‘buy-to-let’ corporate landlords if it is a property rental business with nobody connected to the company occupying the property or properties.
Persons connected with the company include anyone who controls the company or is connected with someone who controls the company, such as a spouse or relative.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.
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