If the answer is “yes” you need to be aware new rules are about to come into force that could leave home owners with property partly or wholly owned by a company with a bill of £7,000.
In the 2014 budget the threshold for dwellings that fall within the Annual Tax for Enveloped Buildings (ATED) – or what used to be called the Annual Residential Property Tax – was reduced from £2m to £1m.
In 2016 this threshold will be reduced further to £500,000 which means an enormous amount of additional properties will fall into the bracket and the owners of those properties will have to complete and submit an ATED return.
The government has made the change as part of their continuing campaign to stamp out tax avoidance. They have identified people in business often use their property as a way of reducing their tax burden and are looking for a way to claw back some of this lost revenue.
Admittedly the majority of properties are still owned by individuals but some are also be owned – or ‘enveloped’ - by a company or in partnership with a company, a move the owner may have originally made to reduce their tax liability.
The new ATED legislation will change all of that. Owners of property that is owned or part-owned by companies must be aware of the new rules and the potential liabilities they will create so they don’t end up with an additional and unwanted bill.
It’s also important to remember that there are still tax reliefs available but, in order to claim them, the owner will have to first submit an ATED return.
And if that’s not enough, the picture is muddied further by the fact that there will be exemptions for charitable companies using the dwelling for charitable purposes.
If you have a property that is wholly or partly owned by a company and would like to discuss the upcoming changes or if you would like to discuss any other aspect of your personal tax liabilities please don’t hesitate to contact me.