ATED was introduced with effect from 1 April 2013 to tackle the avoidance of stamp duty land tax (SDLT). The charge relates to residential property owned by a non-natural person, generally a company or a partnership with a corporate member. Initially the charge was just for properties with a value in excess of £2m but the threshold is now £500,000.
Returns must be submitted on or after 1 April in any chargeable period. You’ll need to complete an ATED return if your property:
- is a dwelling
- is in the UK
- 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 completely or partly by a:
- partnership where any of the partners is a company
- collective investment scheme - for example a unit trust or an open ended investment vehicle
Your property is a dwelling if all or part of it is used, or could be used, as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.
Some properties are not classed as dwellings. These include:
- guest houses
- boarding school accommodation
- student halls of residence
- military accommodation
- care homes
The amount you’ll need to pay is worked out using a banding system based on the value of your property.
Valuations are required every five years, the first valuation date was 1 April 2012 which covered the chargeable periods up to 31 March 2018. The last valuation date was 1 April 2017, covering the next five chargeable periods from 1 April 2018 to 31 March 2023. The next valuation date will be 1 April 2022.
Relief and Exemptions
Relief from the ATED charge is available if the property is used for certain qualifying purposes these broadly include the following:
- Dwellings that are rented on a commercial basis with a view to a profit
- Properties that are part of a genuine property development business or property trading business
- Properties that are run as a commercial trade carried on with a view to a profit and open to the public for at least 28 days per year
- Properties held as employee accommodation by a qualifying trading business, as long as the occupying employee’s interest is less than 10% of the trade profits (for trades, property rental businesses and partnerships) or, the employee is entitled to a 10% or greater share in any company that is entitled to the single dwelling in question, or in that single dwelling interest itself
- Farmhouses occupied by working farmers or qualifying former long serving farmers (or their surviving spouses or civil partners).
There are other reliefs, in addition to the above available, providing certain conditions are met.
Relief must be claimed via a Relief Declaration Return (RDR). A different RDR must be completed for each type of relief but, once made, the declaration will cover all properties owned by the same non-natural person qualifying for the same relief in the same tax year.
Properties held for charitable purposes that are not occupied by substantial donors or their associates are exempt from ATED. Certain other entities are exempt from ATED including public bodies, and bodies established for national purposes.
Find out more about eligible relief and exemptions here.
As with most tax affaires, penalties will be incurred for late payment and filing and are the same as those which apply to self-assessment late filing and payment.
If you would like to discuss whether your company might be liable to ATED, please contact us for advice.