The deadline for 2021/22 annual ATED compliance is approaching
For companies that hold residential property with a market value of more than £500,000, the Annual Tax on Enveloped Dwellings (ATED) deadline is approaching. ATED returns or relief declaration returns for 2021/22 should be submitted between 1 April 2021 and 30 April 2021 with any tax due paid on, or before, 30 April 2021.
What is the ATED?
ATED came into force 1 April 2013 as part of the 2013 Finance Act to deter the holding of high value residential properties within a corporate structure. When first introduced it included properties worth over £2 million and owned by either companies or partnerships with a corporate member.
This was expanded in 2015, to properties worth over £1 million and then again in 2016 to include properties worth more than £500,000.
Unlike other UK tax regimes, the ‘tax year’ for ATED runs from 1 April to 31 March and requires returns to be submitted at the start of the annual period. Failure to submit can result in interest charges and penalties.
Are there exemptions from filing or charges?
There are very few exemptions from the requirement to file a return (exemptions are given to care homes, hotels, boarding schools, etc). However, there are a large number of exemptions from the charges.
Property rental businesses (where let commercially to unconnected parties), property dealers and developers are exempt from the charge, but a claim to the exemption must be made through an “annual return” known as a relief declaration return. If a company does not submit this claim by the due dates, penalties are applied.
How much is the return charge?
If a tax charge is in point, it is based on the property’s value. For 2021/22 the amount ranges from £3,700 up to a maximum of £237,400 across the six bands detailed below.
|Property Value||Annual Charge|
|£500,000 up to £1 million||£3,700|
|£1 million up to £2 million||£7,500|
|£2 million up to £5 million||£25,300|
|£5 million up to £10 million||£59,100|
|£10 million up to £20 million||£118,600|
For this reporting period, the value is determined by the market value of the property as at 1 April 2017, or its original cost if acquired after this date.
On 1 April 2022 all residential properties will need to be revalued and if a property is over £500,000 in 2022 it may come into the regime next year. Seeking early advice is recommended to understand if you will come into the regime, even if you are not currently within it.
How do I file an ATED?
ATED returns or relief declaration returns should be submitted via HM Revenue and Customs ATED Online Service. The online system involves a registration process, which can be completed in advance of the deadline, however submissions can only be made within the April submission window. We can assist with guidance on this and we can file on behalf of your company.
For more information on related issues, please contact Victoria Nicoll.