What is the Annual Tax on Enveloped Dwellings (ATED) and who has to pay it?

Full answer

The Annual Tax on Enveloped Dwellings (ATED) applies where a UK residential property valued above GBP 500,000 is held within a corporate 'envelope' -- typically a company, a partnership that has a corporate member, or a collective investment scheme. It was introduced to discourage holding high-value homes through companies to avoid other taxes. Who it affects: companies and corporate structures owning dwellings above the GBP 500,000 threshold, including overseas companies owning UK homes. Individuals owning property in their own name are not within ATED. The charge is a flat annual amount that rises in steps according to the property's value band, with values reassessed on fixed revaluation dates. Because the specific ATED band charges are not on our rate card, look up the current annual amounts on gov.uk -- do not assume a figure. Crucially, many properties qualify for relief that reduces the charge to nil, for example dwellings let commercially to unconnected third parties, properties held by property developers or traders, or those open to the public. However, relief is not automatic: an ATED relief declaration return must still be filed each year by the deadline, usually near the start of the chargeable period in April, to claim it. Missing the filing deadline can trigger penalties even where no tax is ultimately due. Disposals of properties held in an envelope can also have wider tax consequences, so corporate owners should consider Corporation Tax and Capital Gains positions alongside ATED. If you hold a residential property through a company, confirm the current value band charges and filing dates on gov.uk, and take advice on whether de-enveloping (moving the property into personal ownership) is worthwhile given other tax costs.

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