ATED’s were introduced as part of a range of measures aimed at making it less attractive to hold high-value UK residential property indirectly. Consequently, if you are a company (or other type of entity) that holds a UK residential property valued at £500,000 or more, you will need to complete an ATED return.
The value originally started as £2,000,000 and dropped to £1,000,000 and has now dropped to £500,000.
Residential properties valued at £500,000 or more as at 1 April 2012, or at date of purchase if later, are liable. The value of the property is used for the five years starting from 1 April 2012. Residential properties will need to be revalued as at 1 April 2017 and if £500,000 or more will fall within the ATED regime from 1 April 2018 onwards.
In most cases there will be no actual tax due, but a return will need to be filed in order to claim relief from the charge and avoid a penalty.
The return is submitted a year in advance and assumes the property will be held for that year ahead. Where the property is disposed of or there has been a change, a further return would need to be submitted to HMRC.
So, when do you need to complete an ATED return?
If your company owns a residential property valued at more than £500,000, a return and payment (if required) must be submitted by 30 April in the ATED period. For example, if your company has a property that falls within the limit, the ATED return for the period ended 31 March 2018 would be due on 30 April 2017.
If your company has acquired a property valued at more than £500,000, a return and payment (if required) must be submitted within 30 days of acquisition of the property. For example, if your company purchases a property on 1 June 2017, the return and tax would be due on 1 July 2017, for the period ended 31 March 2018.
If your company has acquired a new build valued at more than £500,000, a return and payment (if required) must be submitted within 90 days of the purchase.
Are you exempt from the ATED tax charge?
In most cases there will be no tax payable even where a return is required. However, if you are required to pay tax, relief is available for:
- property rental businesses
- property developers
- property traders carrying on a property trading business
There are also other reliefs available, which are less commonly applied.
It is vital to ensure that your ‘company’ is and does meet the required submission deadlines of the return and if required payment of the tax charge, in order to prevent being penalised by HMRC. If you would like to see if you are liable, please contact Paul Dell with details of any residential properties held or acquired by your company.
To find out more about ATED and the work we do for the property sector, please visit our sector page.