Should you be doing ATED returns as a property investor?

What is an ATED?

An Annual Tax on Enveloped Dwellings (ATED) is an annual tax that’s payable by UK companies that own UK residential property with a  value greater than £500,000. If your property satisfies one of the following criteria and you’re a UK landlord, you’ll need to complete an ATED return:

If your property is a dwelling

If it was valued at more than:

• £2 million (for 2013/14 returns onwards)
• £500,000 (for 2016/17 returns onwards)
• Click here to find out the value of your property
• Is owned wholly or partly by:
• A company
• A partnership where any of the partners is a company
• A collective investment scheme – eg a unit trust or an open ended investment vehicle

When the tax return and payment are due

You must submit your tax return either on or after April 1^st in any chargeable period. If you purchase an ATED property, your tax return and payment will be due within 30 days of the purchase, or 90 days if the property is a new build.

What is the ATED charge?

The annual charges are as follows (and are payable in advance):

ATED charge for the year commencing:	1 April 2021	1 April 2020	1 April 2019	1 April 2018	1 April 2017
Property value
£500k-£1m	£3,700	£3,700	£3,650	£3,600	£3,500
£1m-£2m	£7,500	£7,500	£7,400	£7,250	£7,050
£2m – £5m	£25,300	£25,200	£24,800	£24,250	£23,550
£5m – £10m	£59,100	£58,850	£57,900	£56,550	£54,950
£10m-£20m	£118,600	£118,050	£116,100	£113,400	£110,110
£20m+	£237,400	£236,250	£232,350	£226,950	£220,350

 

Which reliefs and exemptions mean you don’t have to pay?

If your property meets the following criteria you may be able to claim relief. Your property:

• Is in the process of development for resale by a property developer
• Is let to a third party on a commercial basis, whilst not being occupied by anyone who is connected to the owner
• Hasn’t been acquired by anyone under a regulated home revision plan
• Is owned by a property trader as stock of their business for the sole purpose of resale
• Hasn’t been repossessed by a financial institution as a result of its business of lending money
• Is being used to provide living accommodation to certain qualifying employees be a trading business
• Is a farmhouse that’s occupied by a farm worker or a former long-serving farm worker
• Is owned by a registered social housing provider or a qualifying housing co-operative

What’s not classed as a ‘dwelling’?

If your property is one of the following you’ll also be exempt from completing an ATED:

• Hotel
• Guest house
• Boarding school accommodation
• Hospital
• Student halls of residence
• Military accommodation
• Care homes
• Prisons

Whilst your property may be exempt, you’ll need to submit a return minus any paid tax. If you’re eligible for the reliefs then you’ll need to submit a Nil return to HMRC, and request the relief by completing a relief claim declaration form. Note that this must be completed by April 30^th for each accounting period.

What will happen if returns and payments are made late?

HMRC will issue you separate fines for both the return and payment should either be made late.

How do you submit your ATED and payment?

Step 1 – Confirm whether your property is an enveloped dwelling (or not)

Step 2 – Check to see if you’re eligible for any exemptions, and claim them

Step 3 – Register online for the ATED service

Step 4 – Keep a record of the 15 digit ATED reference number HMRC will provide you with (you’ll find it displayed on the ATED service homepage)

Step 5 – Make a claim in case reliefs are available

Step 6 – If no charge is due, submit a return

Step 7 – If ATED is applicable and a payment is due, complete and file your return online

Step 8 – Make your full ATED payment – and that’s it! You’re done for another year

Final thoughts from SG Accounting

Whether you’re a new landlord, or you’re considering it, and are starting to get your head around everything you need to do to ensure you stay on the right side of the taxman, SG are here for you. Our expert accountants are specialists in the complex needs of landlords, and we’re here to help you navigate the confusing world of tax, and ensure you pay what’s due in the most tax efficient way possible. Get in touch today to find out more.