Annual Residential Property Tax
ATED is a tax payable on high value dwellings. It started on 1 April 2013 and is payable each year.
You’ll need to complete an ATED Tax Return for your property if all of the following apply:
- it’s a dwelling
- it’s situated in the UK
- it was valued at more than £2 million on 1 April 2012, or at acquisition if later
- it’s owned by a company (unless acting as trustee), a partnership where one of the partners is a company or a unit trust
Hotels, guest houses, boarding school accommodation, hospitals, student halls of residence, military accommodation, care homes and prisons are not dwellings, so don’t come under ATED.
There are reliefs that could reduce the tax completely (see below) but you can only claim them if you complete and send in a return.
The amount of ATED is set out below in the table below:
|Property Value||Annual Tax 2013-14|
|£2,000,001 to £5,000,000||£15,000|
|£5,000,001 to £10,000,000||£35,000|
|£10,000,001 to £20,000,000||£70,000|
|£20,000,001 and over||£140,000|
There are a number of available reliefs, subject to detailed conditions. For example:
- Dwellings let out on a commercial basis
- Historic houses open to the public
- Working farmhouses
- Dwellings held for charitable purposes
- Dwellings held for property development or trading
- Dwellings available for occupation by certain employees
Valuation of property
For ATED the value of the dwelling to be used is its value:
- On 1 April 2012, if you owned your interest in the property at that date.
- When you bought or acquired it, if that is a later date
- At the date of entry on the Council Tax Valuation Lists or when it’s occupied, whichever is the earliest, if the dwelling is a new property or an existing building that’s been altered so that it is to be a dwelling
The valuation figure for the first 5 ATED return periods beginning 1 April 2013 will be the valuation at 1 April 2012 – or when you bought or acquired it, if later. All properties within ATED need to be revalued again in five years time, which will be 1 April 2017 (to cover the ATED returns for the five year periods starting on 1 April 2018).
You need to self assess the value of the property. The valuation will be reported on the ATED return.
Pre-return banding check (PRBC)
You can ask HMRC to confirm the banding they will accept the property is within, by sending your valuation for a Pre-Return Banding Check (PRBC). A PRBC will only be available to those who reasonably believe that their property valuation falls within a 10 per cent variance of a banding threshold.
Returns and payment
You must send your completed return and payment by 30 April at the beginning of each year.
For the first year of ATED only, which is the full 12-month period beginning 1 April 2013, there is a transitional arrangement; the return will be due by 1 October 2013 and payment will be due by 31 October 2013.
For all future years, the return and the payment will be due by 30 April. For example, for the ATED period 1 April 2014 to 31 March 2015, both the return and payment are due by 30 April 2014.
If your dwelling first falls within ATED on a date after 1 April in an ATED period, then the return and payment are due within 30 days where purchased or 90 days where the dwelling is newly built. For example, if you buy a property on 1 July, your return and payment would be due on 31 July.
If you don’t complete and send HMRC a return or payment, or you send it late or make a mistake on it, you may have to pay a penalty and interest.
If you know you might need to pay ATED (you’re ‘potentially liable’) for a dwelling then you need to complete and send a return. If there’s a relief available that means that you don’t have to pay ATED, you can only claim it by completing and sending a return to HMRC.
How we can help
We can help in any the following ways:
- We can advise whether your dwelling is subject to ATED
- We can advise on possible restructuring. For example, in certain cases it may be to your advantage to transfer ownership of the dwelling out of the company to so that ATED does not arise. This will have other tax consequences which must be considered carefully before any decision is taken.
- We can assist with valuation of your dwelling
- We can file your ATED returns
For fresh ideas, new possibilities and a value driven service go to Garside & Co LLP Chartered Accountants in London.