Annual Tax on Enveloped Dwellings (ATED) – April 2017 revaluation

Any non-natural owner e.g. a company or corporate partner of a partnership holding a UK residential property valued at over £500,000 has ATED compliance obligations. The last valuation for properties was on 1 April 2012 (or the date of acquisition if the property was acquired after 1 April 2012) – this valuation will again be applicable for the 2017/18 ATED return. However, a revaluation of the property will be needed on 1 April 2017 to ascertain the ATED banding for 2018/19 et seq (with revaluations being required every five years thereafter).

Properties liable to the ATED charge (not wholly used for a qualifying purpose)

 If the revaluation as at 1 April 2017 takes the property into the next ATED banding, a higher ATED charge will be payable unless the property is used for a qualifying purpose from 1 April 2018.  The ATED bandings and 2017/18 rates are as follows:

Property value

2017/18

£500,001 – £1,000,000

£3,500

£1,000,0001 – £2,000,000

£7,050

£2,000,001 – £5,000,000

£23,550

£5,000,001 – £10,000,000

£54,950

£10,000,001 – £20,000,000

£110,100

Over £20,000,000

£220,350

 

The CPI (Consumer Prices Index) for September 2017 will denote the increase relevant for the 2018/19 annual charges. Properties moving up a band will generally see an increase in the annual charge of about 100%, but properties currently in the £1m to £2m band and moving into the £2m to £5m band will see an increase in the annual charge of over 300%.

In addition to considering properties already within the ATED regime, a non-natural owner must also check if it has a beneficial interest in any UK residential property that has previously been under the ATED £500,000 starting threshold. If the property is worth more than £500,000 as at 1 April 2017, it will be within the ATED regime for 2018/19 and it would be necessary to consider if an ATED charge is payable or if ATED relief is applicable. Any 2018/19 ATED liability would become payable by 30 April 2018.

Properties qualifying for full ATED relief – no ATED liability

Strictly, as long as the property qualifies for relief from the ATED charge, there is no real need to undertake a valuation as at 1 April 2017. However, a valuation will be required if a non-natural owner holds UK residential property that is either:

  1. used at any time for a non-qualifying purpose and is therefore subject to an ATED charge, or
  2. valued under £500,000 as at 1 April 2012 (or at acquisition, if later) but its valuation on 1 April 2017 is more than £500,000 and the company is not already filing a relief declaration for other properties qualifying for the same relief.

In all cases, the April 2017 re-valuation date is effective from the 2018/19 ATED return and has no relevance to the 2017/18 position. The 2017/18 ATED return is due for submission by 30 April 2017 with any ATED charge also being payable by 30 April 2017.

Please contact us further regarding ATED compliance services and information regarding ATED including the qualifying conditions for relief from the annual charge.

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