Annual Tax on Enveloped Dwellings (ATED): At a glance

What is ATED? When does ATED apply? What relief is available and how is it claimed? What are the ATED filing requirements?

This is a freeview 'At a glance' guide to the Annual Tax on Enveloped Dwellings or ATED.

Subscribers: for your detailed guide to this topic see Annual Tax on Enveloped Dwellings (ATED).

At a glance

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

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

• An ATED return must be filed in advance on or after 1 April, for the chargeable period.
  • i.e. returns for the period 1 April 2024 - 31 March 2025 must be filed on or after 1 April 2024.
• ATED is payable annually in advance by 30 April for the chargeable period covered by the return.
• The ATED is based on the taxable value of the property:
  • Properties are revalued for the purposes of ATED every five years.
  • Different types of transactions may trigger a new valuation date.
• Companies within the ATED rules can register themselves or appoint an agent to act on their behalf.

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.

When is a property owned?

For ATED to apply the NNP must have a 'chargeable interest' in a property.

The general rule is that chargeable interest means:

• Any estate, interest, right or power in or over land in the UK.
• The benefit of an obligation, restriction or condition affecting the value of any of the above.

Non-Natural Person (NNP)

An NNP is: 

• A company.
• A partnership with a corporate partner.
• A collective investment scheme.

Taxable value

The taxable value is the value of the property at the applicable valuation date.

The ATED applies if a dwelling has a taxable value in excess of:

Valuation date

For 2023-24 to 2027-28 the taxable value is:

• Its value at 1 April 2022, or if acquired after 1 April 2022, its cost.

For 2018-19 and the following four years the taxable value is:

• Its value at 1 April 2017, or if acquired after 1 April 2017, its cost.

For years up to and including 2017-18 the taxable value is:

• The 1 April 2012 valuation, or if acquired after 1 April 2012, its cost.

Pre-return banding checks (PRBC)

• HMRC will provide a Pre-Return Banding Check PRBC to confirm whether your valuation is acceptable. See Annual Tax on Enveloped Dwellings (ATED) for when 

What is the ATED charge?

The annual charge is as follows (payable in advance):

Acquisitions, disposals and improvements

• See Annual Tax on Enveloped Dwellings (ATED) for what happens when a property is acquired, disposed of or improved during the ATED return period.

De-enveloping

• Companies may decide to de-envelope a property, that is return it to shareholders, if so then they should consider the tax consequences. See De-enveloping property.

ATED Reliefs and excluded dwellings

See Annual Tax on Enveloped Dwellings (ATED) for details of how to claim relief from ATED.  

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 on a commercial basis.
• Farmhouses occupied by working farmers.
• Held by trading companies for the use of employees in the trade.
• See Annual Tax on Enveloped Dwellings (ATED) for a full list.

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. See Annual Tax on Enveloped Dwellings (ATED) for the other conditions which apply here.

You cannot claim relief if the property is occupied by a non-qualifying individual. See Annual Tax on Enveloped Dwellings (ATED) for who will be classed as a non-qualifying individual in respect of your property.

Relief is also available for qualifying housing co-operatives. This relief was introduced in 2021 with a retrospective effect from 1 April 2020.

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 (e.g. the trustees of the British Museum)

ATED penalties

These follow the penalty regimes under schedules 55 and 56 FA 2009 for late filing and late payment regimes and there are also penalties for error or mistake leading to a loss of tax under schedule 24 FA 2007. 

• See Penalties ATED for worked examples.

Tax relief for the ATED charge

• See Annual Tax on Enveloped Dwellings (ATED) for when a tax deduction is available for the ATED charge.