Annual Tax on Enveloped Dwellings

What is Annual Tax on Enveloped Dwellings (ATED) and who does it apply to?

ATED is a yearly tax that was first introduced from 1 April 2013 and is payable by:

• Companies (UK and overseas)
• Partnerships with a corporate member
• Collective investment schemes (including unit trusts).

The charge applies to UK residential properties worth £500,000 or more.

How is ATED calculated?

Those within the ATED regime are subject to an annual property tax based on the value of the property held. Revaluations occur every five years.
The ATED year runs from 1 April to 31 March. The charge for the year to 31 March 2027 is based on the value of the property on 1 April 2022 (or acquisition, if later).

Chargeable amounts for 1 April 2026 to 31 March 2027 are as follows:

Property value	Annual charge
More than £500,000 up to £1 million	£4,600
More than £1 million up to £2 million	£9,450
More than £2 million up to £5 million	£32,200
More than £5 million up to £10 million	£74,450
More than £10 million up to £20 million	£151,450
More than £20 million	£303,450

The amounts tend to increase each year. Late payment of the tax will attract a 5% penalty after 30 days

Reliefs and exemptions

Many businesses qualify for relief from the ATED charge. Where this applies, a return must still be filed by the due date. Common reliefs include:

• Property rental to third parties
• Property development or trading
• Employee accommodation
• Charitable use

It should be noted that there is increased scrutiny from HMRC on ATED returns and as part of this stricter approach, HMRC has recently started to issue letters to companies under a ‘One to Many campaign’. For example, for companies claiming rental relief exemption, the letter requests companies to provide evidence that they are a qualifying property rental business; renting to a third-party tenant is not necessarily sufficient, as HMRC is now delving more deeply into whether the company may not be run on a commercial basis and with a view to profit, especially if some losses have been made historically.

When must ATED returns be filed and tax paid?

The ATED year runs from 1 April to 31 March. Chargeable and relief returns must be filed a year in advance, with the filing and payment deadline being 30 April. The ATED return can only be filed online from 1 April 2026, leaving a tight window.

Where a dwelling is acquired during a chargeable period, the filing and payment deadline will be 30 days following the date of acquisition.

As the return is due towards the beginning of the chargeable period, this may mean that an amendment needs to be made at a later date if, for example, a property is sold, or if a property becomes eligible for or ceases to be eligible for relief.

A penalty regime exists for the late filing of ATED returns, including for Relief Declaration Returns. These can mount up on an annual basis if not addressed, so it is vital Returns are submitted where required, even if there is no ATED charge due.

Crowe ATED services

Crowe’s Private Client Tax team offers both compliance and advisory services to assist clients in navigating ATED matters. 

ATED compliance services broadly cover:

• preparation and submission of ATED returns, ensuring compliance with all filing requirements
• liaising with HMRC on your behalf on all ATED-related matters.

ATED advisory services broadly cover:

• determining eligibility for reliefs
• guidance on how and when ATED may apply, including upon acquisitions and disposals of properties
• voluntary disclosures to HMRC on cases where ATED has not been previously considered or dealing with HMRC investigations into the ATED position.
• mixed use of properties.

If you have any queries or require assistance with your ATED filings, please speak to your usual Crowe Tax Advisor.