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Owning residential property

Properties valued at £500,000 and above now come within the scope of ATED, which means many more companies are feeling its impact.

Owning residential property

ATED – Annual Tax on Enveloped Dwellings

ATED (annual tax on enveloped dwellings) affects any company who holds residential property. It also impacts some other entities, such as partnerships with corporate partners, some trusts and certain collective bodies holding residential property.

The regime has only been with us since 2013, when properties valued at £2m and over were affected. More companies are now feeling the impact of the tax as properties valued at £500,000 and above came within the ATED regime from 1 April 2016.

There are several elements to consider:

  • ATED Stamp Duty Land Tax
  • ATED annual charge and annual returns
  • ATED relief declarations
  • ATED capital gains tax

Whilst there are exemptions and reliefs available for property held for different purposes, most of these reliefs need to be claimed. Understanding if you are eligible to claim the reliefs will help you avoid penalties and fines.

Valuation

Valuation is key, as it determines if the property comes within the regime. Property valuations for the current ATED chargeable period, which runs from 1 April 2018 to 31 March 2019, are based on values at:

  • 1 April 2017, or
  • the date the property was purchased, or
  • when the property becomes a dwelling.

Whichever date is the latest is the valuation date for the purposes of the ATED regime.

Properties within ATED must be revalued every 5 years from 1 April 2012. This means residential property held in a corporate structure should have been revalued on 1 April 2017 if it was likely to be worth £500,000 or more. The new valuation will apply for the chargeable year to 31 March 2019.

Returns and charges

Returns under ATED need to be submitted by 30 April in the chargeable year. This is more than 11 months before the end of the relevant tax year

Exemptions from the regime are available for some properties such as hospitals, care homes, and hotels.

For each property you own that falls under the regime, you need to consider if you should submit an annual return or pay a charge.

Each type of relief that you wish to claim requires you to complete a relief declaration form. Many properties held for business use such as property development, commercial letting or use by employees can benefit from one or more reliefs, but the rules can be complex and need to be reviewed with care.

Help and support from WMT

To guide you through the pros and cons of holding properties within the regime or your options for holding them in another way, we can:

Assess if your property is classed as an ‘enveloped dwelling’ and is subject to ATED

Identify and claim all available reliefs on your behalf

Prepare and file your ATED returns with HMRC

Advise you on the most suitable way to hold the property in your particular circumstances, and on restructuring to remove your property from the regime, if that is the best option

Advise on tax efficient structures for acquiring UK property interests and for UK property businesses.

Tax specialists at WMT will recommend the best property ownership structure for your particular business and personal financial goals.

For expert advice and help on ATED, get in touch with our tax team.

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