Annual Tax on Enveloped Dwellings (ATED)

Michelle Davies, 21 May 2024

ATED has been around since 2013 and is an annual tax payable mainly by companies that own a UK residential property valued at more than £500,000. There are reliefs available, meaning that there is often no tax charge for certain dwellings.

What is ATED?

The ATED is an annual tax charge on UK dwellings held by a Non-Natural Person (NNP) e.g. a company.

It applies to properties over a specific value, unless a relief is claimed. It does not apply to individuals.

What is a dwelling?

ATED is only charged to Non-Natural Persons (NNP) owning a dwelling. A dwelling is a property that is:

• Used all or in part as a residence.
• Is in the process of being constructed or adapted as a residence.
• Certain residential properties are not dwellings.
• Undeveloped land is only subject to ATED in certain circumstances.

Non-Natural Person (NNP)

An NNP is:
• A company.
• A partnership with a corporate partner.
• A collective investment scheme.

Taxable Value

The ATED applies if a dwelling has a taxable value in excess of £500,000.

For 2023-24 to 2027-28 the taxable value is its value on 1 April 2022, or if acquired after 1 April 2022, the cost.

What is the ATED Charge?

The annual charge for 1 April 2024 to 31 March 2025 are set out below:

Property Value Annual Charge

More than £500,000 to £1million - £4,400

More than £1million to £2million - £9,000

More than £2million to £5million - £30,550

More than £5million to £10million - £71,500

More than £10million to £20million - £143,550

More than £20million - £287,500

ATED Reliefs

Relief applies and there is no tax charge for dwellings that are:

• Being redeveloped or held as stock for resale by a property developer.
• Held by property rental businesses and let out to a third party.
• Farmhouses occupied by working farmers.
• Held by trading companies for the use of employees in the trade.

Relief for property development applies where the interest is held exclusively for the purpose of developing and reselling the land in the course of the trade.

You cannot claim relief if the property is occupied by a non-qualifying individual.

Exemptions

The following are exempt from ATED and do not have to submit a return or claim a relief:

• Charitable companies holding a property for charitable purposes.
• Public bodies.
• Bodies established for National Purposes.

This is a complex area of taxation. Please do let us know if you have any queries in this respect.

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