What is ATED?
ATED is an annual tax payable in advance by companies and other non-natural persons (including partnerships with corporate members) who own an interest in UK residential property valued at over £500,000.
The charge applies to houses, self-contained flats, gardens and mixed-use properties. Certain properties such as hotels, guest houses and care homes are specifically excluded.
ATED also extends to property developers and letting businesses but there are reliefs available to reduce the ATED charge to nil.
Annual Tax on Enveloped Dwellings return must be submitted to HMRC before 31 March each year.
Companies must revalue their property every 5 years in line with Annual Tax on Enveloped Dwellings (ATED) legislation. 2023 to 2024 chargeable period is a revaluation year. Companies must use the valuation date of 1 April 2022 or the date of acquisition if later, to revalue their properties.
This valuation sets the rate of annual payment until the next revaluation year.
Once a property has been revalued, the annual charge is applicable for the next five years.
In line with other tax charges, the ATED rates for 2023-24 have increased between 8% and 12%.
Chargeable amounts for 1 April 2023 to 31 March 2024
|£500,001 up to £1m
|More than £1m to £2m
|More than £2m to £5m
|More than £5m to £10m
|More than £10m to £20m
|More than £20m
Companies that own residential properties in the UK, which were previously worth less than £500,000, should ensure they undertake a revaluation and notify HMRC by completing an ATED return if any of their properties now exceed the threshold.
Register for the ATED service
You can submit your returns for ATED yourself or through an agent.
As a business, you need to register for the ATED online service to:
- – submit returns
- – appoint an agent to submit returns for you
You register with your business’s registered business name as well as its UTR, if you have one.
If you’re appointing an agent you’ll also have to:
- – make sure your agent has already set up their agency for ATED and that they’ve given you the correct unique authorisation number
- – enter the unique authorisation number when prompted
Overseas businesses with no HMRC UTR
You can register for the online service or appoint an agent to do it for you.
If you want to appoint an agent, you’ll need to complete an ATED1 form, which allows your agent to complete your registration.
Submit a return where a charge is due
You should submit this using the ATED online service. HMRC will calculate what you owe based on what you report — this is known as a chargeable return.
The service will save your return as a draft for 60 days. When you submit the return, you’ll get an instant payment reference number.
Submit a return where no charge is due
This is known as a Relief Declaration Return, which you can submit using the ATED online service.
You do not need to enter any property details, or valuation, for a Relief Declaration Return. You can find more information in the Annual Tax on Enveloped Dwellings Returns Notice.
You can make one type of relief claim or return to cover multiple properties if they’re all eligible for the same relief. The service will save your Relief Declaration Return as a draft for 28 days.
Annual Tax on Enveloped Dwellings – Penalties
The penalties for failing to pay ATED in full and on time are:
- – an initial penalty of 5% for tax unpaid at the penalty date; and
- – two further penalties of 5% each for tax unpaid at five and 11 months after the penalty date.
Accessing the ATED online service
To use the Annual Tax on Enveloped Dwellings online service, you need a Government Gateway user ID and password. If you do not have a user ID you can create one when you register.
If you cannot use the ATED online service or need a paper return
- – if you cannot use the Annual Tax on Enveloped Dwellings online service
- – to get a paper return for years before 1 April 2015
How can MCL Accountants help with your Annual Tax on Enveloped Dwellings return?
Contact MCL Accountants on 01702 593 029 if you have any queries about the Annual Tax on Enveloped Dwellings or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.