Business Services

£500,000 company owned properties subject to ATED from 1st April 2016

By Lesley Stalker

High value residential property which is owned by a company has been subject to an additional tax, the annual tax on enveloped dwellings (ATED), since April 2013. When it was first introduced, this tax applied to property having a value of more than £2m, and the aim of the tax was to reduce the use of companies for stamp duty avoidance purposes in relation to high value property purchases. The charge was subsequently extended to property having a value in excess of £1m and from 1^st April 2016, it will be further extended to company-owned UK residential property worth over £500,000. It is very easy for companies owning properties in London and the south east to exceed this £500,000 threshold, due to the high average property prices in the area, and can result in additional tax of between £3,500 and £23,350 to pay each year.

Property investors should consider the following:

Does ATED apply to your property?

The first tests are whether the property is a residential property which has a value in excess of £500,000, and is owned by a company (or a partnership with one or more corporate members). If the answer to each of these questions is yes, then ATED will apply for 2016 if the value of the property was £500,000 or more on either 1^st April 2012, or the date it was acquired if later.

Note the property valuation will need to be revised in 2017, and this revised value will apply for the years from 1^st April 2018 to 31^st March 2023.

If ATED applies, what reliefs and exceptions are available?

You may be able to claim relief if your property is:

Let to a third party on a commercial basis and isn’t occupied, or available to be occupied, by anyone connected with the owner;
Open to the public for at least 28 days a year;
Part of a property development business and is being developed for resale;
Being used to provide living accommodation to qualifying employees;
A farmhouse occupied by a farm worker;
Providing registered social housing.

When does the ATED return need to be filed?

If ATED applies to your property, even though relief may be available, a return must be submitted to HMRC in the tax year to which the charge relates. This means that if your property is subject to ATED from 1^st April 2016, a return must be filed by 30^th April 2016, together with the payment due. If you are able to claim one of the reliefs outlined above, you must still file a return, and claim the relief, to ensure that no payment is due.

Are there any penalties for late filing?

A £100 penalty will apply if you are late in filing the ATED return, with no period of grace.

Following that, for the first 90 days of late filing, a further penalty of £10 per day will be charged, following which a charge will be made of either £300 or 5% of the tax due, whatever is the higher figure. After 6 months, the penalties can be as high as £1,300.

How to submit an ATED return

Property owners paying ATED for the first time will need a special reference number, which should be quoted at the time of making payment. Initially obtaining this number takes approximately ten days and it is granted upon receipt of the ATED return.

If you are eligible for ATED relief, a return must be submitted in order to make a claim. This process is relatively complex and a separate relief declaration return needs to be filed for each type of relief that can be claimed. For more detail on how to claim ATED relief, read our earlier blog or contact us for more specific advice. https://rjp.co.uk/2014/05/27/essential-tax-relief-details-property-owners-affected-ated/

I am affected by ATED from 1^st April, what steps should I take?

Property owners who now need to file an ATED return and either make a payment, or claim relief, need to act quickly. If you are already registered for ATED you will need to file a return and make any payment due by 30^th April. If you are not already registered, you will need to file a return and await your reference number from HMRC. This should be issued within 10 working days of submission of the return, following which you will need to make any payment due by 30^th April. So this is a tight timescale for everyone falling within ATED, and an extremely tight timescale for anyone registering for the first time.

What if I buy a property during the year?

If you buy a property after 1^st April 2016 and it falls within ATED (even if relief is due), you have 30 days from the date of acquisition to file an ATED return and make any payment due. If you are a property developer, then you have a more generous timescale – you must file a return within 90 days of completing the property development.

We can help clients with their filing requirements but we recommend that anyone who is affected contacts us as soon as possible to avoid the possibility of a late filing penalty.

If you would like to discuss whether your property is subject to ATED and/ or need help filing your returns, please contact Victoria Rampton by emailing vr@rjp.co.uk.

How to get onboard with RJP

Talk to us

Have an initial discussion with a member of the RJP team to identify ways we can enhance your business's growth with our comprehensive support and strategic advice.

Hassle-free migration

Choose RJP and we'll smoothly manage all transitions, handling paperwork, coordinating with your current accountant, and ensuring no deadlines are missed for a worry-free experience.

A pathway to growth

Finally, we will send you the required documents to sign and return, leaving you to continue leading your business, backed by our abundant, responsive advice and support.

2024 Budget in depth – Key changes to capital gains tax

Business Services, Business Tax, Personal Taxation

Budget 2024 In depth – Inheritance tax changes

Business Services, Business Tax, Personal tax

Budget 2024 – What are the new tax rules for non-doms?

Personal tax, Probate and Inheritance Tax

Here’s what our clients have to say

Hear directly from our clients about how RJP's personal, straightforward approach has made all the difference in their business and personal success.

"I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office."

"I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team."

"I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone."

"Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks."

"RJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable."

Get the latest tax tips to your inbox every month

FAQs

At RJP, we understand that keeping a finger on the pulse of your business's health is crucial. That's why we offer management reporting services—think of them as a regular health check for your company. These insights show you the real-time performance of your business, helping you make informed decisions to nurture and grow your enterprise.

We love seeing your business flourish! Growth and improvement are at the heart of our practical advice. From the ins and outs of everyday operations to big-picture strategic moves, we're here to offer clear, actionable steps that can propel your business forward.

We know dealing with the issue of compliance and auditing can be less than thrilling. That's exactly why we're here—to handle the complex stuff so you don't have to. We offer comprehensive compliance services, ensuring everything is up-to-date without you having to wade through a sea of regulations.

Absolutely! There's a world of opportunity out there to support your business financially, and we're well-equipped to be your guide. We can help you understand and access HMRC’s tax relief schemes that are relevant to you and your business, making sure you're not missing out on any potential benefits.

When you need us, we're just a call or an email away—no question is too small or too large. We're known for our quick responses and our fixed fees mean you can reach out without worrying about unexpected costs. Plus, we always keep things simple and straight to the point. We're not just your accountants; we're part of your team, ready to support both your business and personal needs.