Deadline approaching for Annual Tax on Enveloped Dwellings

Laura Ritchie

Laura Ritchie

Tax Manager

If you’re due to submit an Annual Tax on Enveloped Dwellings (ATED) return, then now is the time to speak to your trusted business adviser at Johnston Carmichael.  ATED is a forward-looking tax, which you may need to submit a return for, even if there is no tax to pay.  This annual return, for the period 1 April 2021 to 31 March 2022, is due to HMRC by 30 April 2021.

What is ATED?​

ATED is an annual tax payable mainly by companies (both UK and non-UK incorporated) that own UK residential property valued at more than £500,000 on 1 April 2017 (or acquisition/completion date if later).

The ATED regime also applies to such properties owned by:

  • A partnership with a corporate member(s), and

  • A collective investment scheme, such as a unit trust or open-ended investment company.

A property falls within the ATED regime if it is a dwelling and all, or part of it, is used or could be used as a residence and includes any land that is occupied or enjoyed as part of the dwelling (e.g. a garden).

Non-residential properties are outside the scope of ATED. There are also other properties that are not classed as dwellings; such as hotels, guest houses, boarding school accommodation, hospitals, student halls of residence, military accommodation, care homes and prisons.

ATED charge and penalties

The chargeable amounts for 1 April 2021 to 31 March 2022 are detailed below:

Property value/bandingAnnual charge (£)
More than £500,000 up to £1m3,700
More than £1m up to £2m7,500
More than £2m up to £5m25,300
More than £5m up to £10m59,100
More than £10m up to £20m118,600
More than £20m237,400

Penalties will be levied by HMRC for non-compliance. There is an initial penalty of £100 if you do not submit an ATED return by the due date, followed by £10 daily penalties if the return is more than three months late. If your return is six months late, a further penalty of £300, or 5% of HMRC’s estimation of your liability to the ATED tax (whichever is higher) will apply. Additional penalties of £300, or 5% of HMRC’s estimation of your liability to the ATED tax, (again, whichever is higher) will apply if your return is 12 months late.

Exemptions and reliefs

Reliefs are available if specific facts are present but an ATED return will still need to be completed and then relief claimed on the ATED return. Relief may be available for:

  • Property Rental businesses;

  • Properties opened to the public;

  • Property developers and traders;

  • Financial institutions acquiring properties in the course of lending;

  • The occupation of employees or partners;

  • Farmhouses; and

  • Providers of social housing.

There are also exemptions for residential property owned by a charity and held for charitable purposes, properties held by public bodies and bodies established for national purposes, and properties conditionally exempt from inheritance tax.

If you would like to discuss whether you have an ATED filing requirement then please get in touch with your usual Johnston Carmichael adviser or, Laura Ritchie.