ATED has now been around for a couple of years, but many advisors are still not familiar with the rules or how they might affect clients. Read on for more information.
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £1 million.
ATED applies if your property:
- is a dwelling
- is in the UK
- is owned completely or partly by a
- company
- partnership where one of the partners is a company
- collective investment scheme – for example a unit trust or an open ended investment vehicle
- was valued at more than £2 million on 1 April 2012, or at acquisition, for 2013/2014 and 2014/15
- was valued at more than £1 million on 1 April 2012, or at acquisition, for 2015/2016 onwards
There are also a number of exemptions from the tax which excludes many properties from the charge.
What is a “dwelling”
A dwelling is a property which could or is used as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.
Some properties aren’t classed as dwellings. These include:
- hotels
- guest houses
- boarding school accommodation
- hospitals
- student halls of residence
- military accommodation
- care homes
- prisons
ANNUAL CHARGE
The amount you’ll need to pay is worked out using a banding system based on the value of your property.
Chargeable amounts for 1 April 2015 to 31 March 2016
| Property value | Annual charge |
|---|---|
| More than £1 million but not more than £2 million | £7,000 |
| More than £2 million but not more than £5 million | £23,350 |
| More than £5 million but not more than £10 million | £54,450 |
| More than £10 million but not more than £20 million | £109,050 |
| More than £20 million | £218,200 |
From 1 April 2016 there will be a further band for properties valued between £500,000 and £1 million. This will have an annual charge of £3,500.
Chargeable amounts for chargeable period 1 April 2014 to 31 March 2015
| Property value | Annual charge |
|---|---|
| More than £2 million but not more than £5 million | £15,400 |
| More than £5 million but not more than £10 million | £35,900 |
| More than £10 million but not more than £20 million | £71,850 |
| More than £20 million | £143,750 |
Chargeable amounts for chargeable period 1 April 2013 to 31 March 2014
| Property value | Annual charge |
|---|---|
| More than £2 million but not more than £5 million | £15,000 |
| More than £5 million but not more than £10 million | £35,000 |
| More than £10 million but not more than £20 million | £70,000 |
| More than £20 million | £140,000 |
There are some calculations that must be done where:
- you only own the dwelling for part of a year
- you change how you use the property, so that it moves into or out of the scope ofATED
- you claim a relief for part of the year
When you buy your property you may also have to pay Stamp Duty Land Tax. There’s a higher rate for corporate bodies.
If you sell your property you may also have to pay ATED-related Capital Gains Tax.
Conclusion
There are a number of exemptions which can remove a property from the ATED regime, such as where the property is rented out at a commercial rate or where the property is under development, however, these are far from straightforward.
If you do have concerns that you or a client may be subject to ATED get in touch now.