17 Feb 2017 12:25 PM

Most people working in the property sector are now aware of the Annual Tax on Enveloped Dwellings (ATED). This is a charge on residential properties owned by companies (and some other structures known as “non-natural persons”).

When the charge was introduced it was applied to properties valued at over £2m on 1st April 2012 or when purchased if later. This threshold has been reduced since then to £500,000 which has brought many more properties within the charge.  Another change is looming on the horizon which will extend the scope further. Properties need to be revalued as at 1st April 2017 with this value being used for the charge for the period starting on 1st April 2018.

This may seem like a long way off, but it makes sense to start considering the revaluations now whether you need a property revaluation, or whether you will be providing the service to your clients.

Although the majority of properties will have increased in value over the past 5 years, it is still possible that some will have decreased in value, especially those in the ultra and super prime brackets. If a property has decreased in value since 1st April 2012 it could mean that it enters a lower tax band.

There are reliefs available for example for property developers and those letting their properties. These reliefs need to be claimed and there is still a requirement to file a tax return. The returns for the period beginning on 1st April 2017 need to be filed by 30th April 2017 and the tax due must be paid by the same date.

The charge itself is also going up with effect from 1st April 2017 as follows:

Property Value

£500,000 to £1m

£1m to £2m

£2m to £5m

£5m to £10m

£10m to £20m

Over £20m

Annual Charge 16/17

£3,500

£7,000

£23,350

£54,450

£109,050

£218,200

Annual Charge 17/18

£3,500

£7,050

£23,350

£54,950

£110,100

£220,350

We are currently advising UK and overseas property investors on ATED and the future changes. If you, or your clients need help with any ATED related issues please do get in touch.