The Annual Tax on Enveloped Dwellings (ATED) is a tax imposed on companies, partnerships with corporate members, and collective investment schemes that own UK residential properties valued at over £500,000.

The term ‘Enveloped Dwelling’ refers to a residential property that is owned or ‘enveloped’ within a corporate wrapper. The tax was introduced in the 2013/14 tax year initially where a property was valued at over £2,000,000.

ATED returns may be needed regardless of whether the property is rented out or used for business purposes.

Will you need to pay ATED? 

ATED applies to:

• Companies (including foreign companies) that own UK residential property valued at over £500,000.

• Partnerships with at least one corporate partner.

• Collective investment schemes, such as unit trusts.

ATED is a fixed annual charge which depends on the property’s value. For the 2023/24 tax year, property had to be revalued based on the valuation at 1 April 2022. This means if you acquired the property after that date, the value from when the acquisition was made will be used instead.

Properties must be revalued every 5 years, with the next revaluation date being 1st April 2027.

What are the amounts payable?

The amount you’ll need to pay is determined using a banding system based on the value of your property.

Chargeable amounts for 1 April 2025 to 31 March 2026

Are there any exemptions and reliefs?

There are certain types of property use that can qualify for full or partial relief from ATED.

Some examples include:

• Property rental businesses that let the property commercially to third parties.

• Property developers holding properties as trading stock.

• Charities using the property for charitable purposes.

• Farmhouses occupied by a farm worker.

• Publicly accessible historic properties.

Remember, even if a relief applies, an ATED relief declaration return may still be required.

What do I need to do, and by when?

• ATED returns and payments are due by April 30 each year, with 2025/26 returns due by 30 April 2025.

• If a property is newly acquired, an ATED return is due within 30 days of acquisition

Failure to submit the ATED return or make timely payments can result in penalties and interest charges, so if you own UK residential property through a company or similar structure, you should always assess your ATED liability and reporting requirements annually.

If ATED returns were required but not previously submitted, then a disclosure can be submitted to HMRC to bring a company’s ATED position up to date.

Consulting the tax experts at Bracey’s Accountants can help you better understand reliefs and exemptions to reduce or eliminate your tax obligation, while ensuring compliance.

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