ATED 2026: Annual Tax on Enveloped Dwellings for Company-Owned Property
ATED 2026/27 rates for companies owning UK residential property over £500,000: charges from £4,150 to £269,450, key reliefs for rental/development/commerce, and 30-day return filing rules.
The Annual Tax on Enveloped Dwellings (ATED) is a charge that has caught many property investors off guard since its introduction in 2013. Designed to penalise the practice of holding high-value residential homes inside corporate "envelopes" -- primarily to avoid Stamp Duty Land Tax on future sales -- ATED now applies to any company owning UK residential property worth more than £500,000, even entirely legitimate property businesses. Understanding whether you are chargeable, which reliefs apply, and when to file is essential for any company or partnership holding residential property in 2026.
Who is caught by ATED
ATED applies to:
- Companies (UK and overseas) that own UK residential property with a value above £500,000.
- Collective investment schemes (unit trusts, authorised investment funds) that own UK residential property.
- Partnerships where at least one partner is a company or collective investment scheme.
It does not apply to individuals, trustees (unless the trust is a collective investment scheme), or partnerships of individuals only.
The test is applied as at 1 April each year (the start of the ATED chargeable period). A company that owns a qualifying property on 1 April 2026 is potentially chargeable for the full 2026/27 period (1 April 2026 to 31 March 2027). If the company acquires or disposes of the property mid-year, the charge is pro-rated.
2026/27 ATED charge rates
The ATED annual charge rates are uprated by reference to September CPI each year. The 2026/27 rates are:
| Property value band | Annual ATED charge |
|---|---|
| £500,001 to £1 million | £4,150 |
| £1 million to £2 million | £8,450 |
| £2 million to £5 million | £28,300 |
| £5 million to £10 million | £65,940 |
| £10 million to £20 million | £132,850 |
| Over £20 million | £269,450 |
These are annual charges, payable in full, not dependent on income or profit. A company owning a £600,000 residential property that sits empty all year still owes £4,150 -- unless a relief applies.
Key reliefs: when the charge is reduced to nil
Most property companies that hold residential property for commercial purposes can eliminate the ATED charge entirely through one of the following statutory reliefs. Critically, reliefs are not automatic -- they must be claimed on an annual ATED relief return filed with HMRC.
Property rental business relief
The most widely used relief. If the company lets the property to a third party (not a "connected person") on a genuine, arms-length commercial basis, this relief reduces the annual ATED charge to nil.
Requirements:
- The letting must be to unconnected third parties. Letting to a director, shareholder, or relative does not qualify.
- The letting must be for a genuine commercial rent.
- The property must be used as the tenant's residence (i.e., it must be a residential property -- the relief is not for commercial property, but ATED itself only applies to residential property).
This relief covers the vast majority of legitimate buy-to-let companies.
Property development relief
If the company carries on a property development trade -- buying property to develop and sell, or to develop and let -- and the property is held as trading stock (not as an investment), the ATED charge is relieved.
This applies to housebuilders, property developers, and renovation-to-sale traders. The key test is that the property must be held with the intention of development and onward sale, and the company must be a genuine trader (not simply holding property and waiting for values to rise).
Genuine property trading relief
Similar to development relief, this applies to companies that buy and sell properties as part of a trading business. The property must be trading stock, not a capital investment.
Other reliefs
Additional reliefs exist for:
- Farmhouses used for agricultural purposes.
- Properties used for public access (heritage properties).
- Registered providers of social housing.
- Properties that are non-residential in nature (ATED only applies to dwellings).
Filing: the 30-day return and annual return
ATED has two types of return:
1. Annual return (chargeable or relief return)
For each chargeable period (1 April to 31 March), the company must file either:
- A chargeable return (declaring the charge due and paying it) if no relief fully covers the property, or
- A relief return (claiming an available relief to reduce the charge to nil).
Both must be filed by 30 April of the relevant chargeable period. For 2026/27 (April 2026 to March 2027), the deadline is 30 April 2026.
2. 30-day return for new acquisitions
When a company acquires a property that becomes chargeable to ATED (because no relief applies from day one), it must file an ATED return and pay the pro-rated charge within 30 days of acquisition. This 30-day clock is tight -- failing to file promptly is one of the most common ATED compliance failures.
If the company acquires a property and immediately claims a relief (e.g., it will be let to tenants from day one), a relief return must still be filed within 30 days.
Interaction with SDLT and CGT
ATED interacts with two other taxes:
SDLT: When a company buys a residential property worth more than £500,000 that will be caught by ATED (i.e., no SDLT relief applies), a 15% flat SDLT rate applies on the entire purchase price -- not the graduated banded rates. This is substantially higher than the individual SDLT rate for the same property. The 15% rate does not apply if the property is to be genuinely let commercially (the same conditions as the ATED property rental relief).
ATED-related CGT: When a company sells a property that was chargeable to ATED (even if only for part of the ownership period), a separate CGT computation applies to the "ATED-related gain" -- the gain attributable to the period when ATED was chargeable. This ATED-related CGT was charged at 28% and was designed to prevent companies using enveloping to shelter large residential property gains from CGT. Post-April 2019, residential property CGT has been aligned at standard company rates, but the historical ATED-related CGT rules may still be relevant for properties held since before 2019.
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For a company owning residential property in 2026/27:
- Identify all qualifying properties -- all UK residential properties with a value above £500,000 held on 1 April 2026.
- Determine the ATED band -- based on the April 2022 revaluation value or acquisition value if acquired after April 2022.
- Identify applicable reliefs -- property rental, development, trading, or other.
- File relief returns by 30 April 2026 -- even if no charge is due, a relief return is still required.
- For newly acquired properties -- file within 30 days of acquisition.
- Keep records of tenancy agreements, rental income, and development plans to support relief claims if challenged.
- Revalue properties at April 2027 -- the next 5-year revaluation point may move properties into a higher band.
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Frequently asked questions
What is ATED?
Annual Tax on Enveloped Dwellings -- an annual charge on companies (and certain partnerships and collective investment schemes) that own UK residential property worth more than £500,000. It was introduced in April 2013 to discourage 'enveloping' residential property in corporate wrappers to avoid SDLT.
What are the ATED rates for 2026/27?
£4,150 for properties worth £500,001-£1m; £8,450 for £1m-£2m; £28,300 for £2m-£5m; £65,940 for £5m-£10m; £132,850 for £10m-£20m; £269,450 for over £20m. These are the annual charges before any reliefs.
Are there reliefs from ATED?
Yes. The most important are: property rental business relief (genuine letting to third parties), property development relief (buying and developing to sell), and property trading relief (buy-to-renovate-to-sell traders). Reliefs must be claimed via a relief return.
When must an ATED return be filed?
The annual ATED return must be filed and any charge paid by 30 April for the chargeable period starting 1 April of the same year. For properties newly acquired or first becoming chargeable, a return must be filed within 30 days.
Does ATED apply to buy-to-let companies?
Not if you claim the property rental business relief. If a company lets a residential property to third parties on a genuine commercial basis, the annual ATED charge is relieved to nil -- but you must still file a relief return each year.
How is the property value determined for ATED?
Property is valued at its market value on the date of acquisition, or at the revaluation date (every 5 years from 2012 base). The next revaluation date was April 2022. Properties must be revalued and the band reassessed at each 5-year point.
What is a 30-day ATED return?
When a company first acquires a property that will be chargeable to ATED (i.e., no relief applies or the relief does not cover the full year), it must file an ATED return within 30 days of acquisition and pay any pro-rated charge.
Can an individual be caught by ATED?
No -- ATED applies to companies, collective investment schemes, and partnerships with at least one corporate partner. Individuals owning residential property personally are not within ATED.
What happens if I miss the ATED filing deadline?
Late filing and late payment penalties apply, similar to corporation tax. HMRC can impose a £100 fixed penalty for late filing, plus daily penalties and surcharges on unpaid amounts. HMRC has been active in discovering non-compliant companies.
Does ATED interact with SDLT?
Yes. When a company buys residential property, a 15% flat SDLT rate applies to properties over £500,000 (unless a relief applies, such as property rental). This was introduced alongside ATED as a further disincentive to 'enveloping' high-value homes.
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