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Annual Tax on Enveloped Dwellings: Increased Rates, Decreased Reporting

15th December 2014

Finance Bill 2015 confirms greater than inflation increases to the annual ATED charges for properties valued at £2 million or more. The new charges will apply for the chargeable period 1 April 2015 to 31 March 2016. The new charges will be: 

   Property Value      Annual Charge  
   £1m - £2m    £7,000
   £2m - £5m    £23,350
   £5m - £10m     £54,450
   £10m - £20m    £109,050
   £20m +    £218,200

Extension of the ATED Regime
As previously announced, the ATED regime will be extended to properties owned by companies and other ”non-natural persons” with a value of £1m or more from April 2015, and to properties with a value of £500,000 or more from April 2016. The annual charge for these properties will be £7,000. 

This extension will see many more properties being brought within the scope of the charge.

ATED Filing Requirements
Following consultation, Finance Bill 2015 introduces legislation to simplify the administration of ATED for property rental and development businesses that hold properties eligible for relief.

Businesses which hold properties eligible for a relief (those let or developed on a commercial basis) will be able to submit a new “relief declaration return” for all properties for which the same type of relief is claimed, and in respect of which no tax is due. No details will be required of the individual properties or the number of properties eligible for the relief. We await publication of the return template for precise details of what will be required.

This administrative relaxation will take effect for chargeable periods beginning on or after 1 April 2015, and will be a welcome simplification.

There will be no change in filing requirements in relation to properties which have an ATED liability.

Next Steps
If you have properties already in the ATED regime, or properties with a value of between £1m and £2m which will fall within the ATED regime from April 2015, contact us to determine:

  • Whether an exemption may be available; and
  • What your filing responsibilities and deadlines will be from April 2015.

Katharine Arthur
Head of Tax
Tel: 020 7969 5610