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High Value Residential Property – ATED Regime Extended to £500k Properties

20th March 2014

Introduced in 2013, the Annual Tax on Enveloped Dwellings (ATED) applies to UK residential properties with a value of £2m or more, where the property is held by a company or other "non-natural person". The following charges may apply:

  • An annual charge of up to £143,750, depending on the property’s value; 
  • Stamp Duty Land Tax (SDLT) at 15%; and 
  • Sales of residential properties by those subject to the ATED annual charge will be brought within the scope of Capital Gains Tax (CGT) with gains accruing on or after 6 April 2013 being subject to tax at 28%. 

Following Budget 2014, the 15% SDLT rate for the purchase of residential properties worth more than £2m acquired by non-natural persons will be expanded to cover all such properties valued at more than £500k. This applies to contracts entered into on or after 20 March 2014

The Annual Tax on Enveloped Dwellings (ATED), will also be extended to properties worth £500k or more, as follows:

  • From 1 April 2015 residential properties owned by non-natural persons (e.g. companies) valued at £1-2million will be liable to an annual charge of £7,000; and 
  • From 1 April 2016 this will be expanded to properties valued at £500,000-£1million; those companies will pay £3,500 annually. 

Exemptions continue to apply for residential properties let to third parties on commercial terms, and for property development businesses.

2014/15 ATED Returns and Tax payment

ATED rates have increased for 2014/15 as follows: 

Property value  Charge for tax year 2013-14 Charge for tax year 2014-15
£2m - £5m £15,000 £15,400
£5m - £10m £35,000 £35,900
£10m - £20m £70,000 £71,850
£20m+ £140,000 £143,750

The reliefs for property rental or development businesses must be claimed each year in the ATED return submitted to HM Revenue & Customs (HMRC).  Penalties will be applied for late or non-submission of returns.

Please contact Katharine Arthur if you require any advice on the ATED regime or any assistance with preparing ATED returns. We can agree fixed fees for these services.