ATED – Claim annual relief on your residential property

Jan 15, 2021
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
Annual relief on residential property

Annual Tax on Enveloped Dwellings (ATED) is an annual tax that requires limited companies owning UK residential properties with a value of more than £500,000 to complete an ATED return.

You must complete an ATED return if your property:

  • Is located in the UK
  • Is a dwelling
  • Was valued at more than:
    • £2 million (for returns from 2013 to 2014 onwards)
    • £1 million (for returns from 2015 to 2016 onwards)
    • £500,000 (for returns from 2016 to 2017 onwards)
  • Is owned by; or partially owned by a
    • Company
    • Partnership where any of the partners is a company
    • Collective investment scheme

All returns are to be submitted in any chargeable period, either on or after 1 April.

Most residential properties (dwellings) are directly owned by individuals; though some dwellings can be owned by a company, the term for this is ‘enveloped’. However, you may qualify for relief if your property meets the following criteria:

  • Let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
  • Open to the public for at least 28 days a year
  • Being developed for resale by a property developer
  • Owned by a property trader as the stock of the business for the sole purpose of resale
  • Repossessed by a financial situation as a result of its business of lending money acquired under a regulated Home Reversion Plan
  • Being used by a trading business to provide living accommodation to certain qualifying employees
  • A farmhouse occupied by a farm worker or a former long-serving farm worker
  • Owned by a registered provider of social housing

If you meet any of this criterion, whilst you may need to register for ATED and file a return you should be able to claim relief. In addition, depending on when the property was first acquired, occupied or is deemed to come into existence for council tax, a return must be filed and relief claimed within 90 days from that date even if this is in the middle of the year.

Based on the above criteria your business may be eligible for relief or exemptions, this can reduce the tax payable or eliminate it completely. However, a claim does need to be made.

If you have any questions about this, please don’t hesitate to contact David Cairns or Stephen Charles.

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David Cairns

Tax Partner, Northampton

Stephen Charles

Tax Partner, Sheffield