ATED is a tax charge introduced from 1 April 2012 and can apply when a company or a partnership, which has a company as a partner, owns residential property in the UK. When introduced it applied to properties in excess of £2m. However, the limit has dropped and ATED now applies to residential properties worth more than £500,000.
Currently, the tax due for each chargeable period depends on the valuation of the property at 1 April 2012 for properties owned on this date. However, the property needs to be revalued at five-yearly intervals; the 2017 return is thus the final year using 1 April 2012 valuations to determine if an ATED tax return is required. The purchase price is used for property purchased since 1 April 2012.
This means that 2018 ATED returns will require a new valuation dated 1 April 2017. With average house prices rising, this revaluation is likely to bring more, previously exempt, properties into the ATED regime. We are therefore advising clients to obtain these valuations now to ensure that valuations are documented ready for next year, especially where houses are close to the £500,000 limit.
This valuation can be determined by either yourself or a professional valuer such as an estate agent or surveyor.
There are various reliefs available to claim which may reduce part or all of the liability due to HMRC. However, a return is still required even if the return is Nil – a correct and on-time return or relief claim is essential to avoid any late filing penalties. If a property value is close to the limit and you are unsure whether you are required to make an ATED return, you can ask HMRC for a Pre-Return Banding Check if your property valuation falls within 10% of a banding threshold. This check needs to be requested from HMRC in plenty of time as it can take up to 30 working days for them to respond.
The 30-day filing window for the ATED return is 1 April 2017 to 30 April 2017, and the payment deadline for any tax due is 30 April 2017.
If you are concerned about the changes to Annual Tax on Enveloped Dwellings, please get in touch with us.