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Annual Tax on Enveloped Dwellings 2023

Peter Bowles, Manager, Corporate Tax
Brick buildings alleyway

Are you due to make an Annual Tax on Enveloped Dwellings (ATED) return by 30 April?

ATED returns for the year until 31 March 2024 must be filed and any tax paid by 30 April 2023.

ATED applies to residential property owned by non-natural persons including companies, a partnership with a corporate member or collective investment schemes (including unit trusts). The charge currently applies for properties worth £500,000 or more.

The charge for the year until 31 March 2024 is based on the value of the property on 1 April 2022 (or on acquisition if later).

Chargeable amounts for 1 April 2023 to 31 March 2024
 Property value Annual charge
More than £500,000 up to £1 million £4,150
More than £1 million up to £2 million £8,450
More than £2 million up to £5 million £28,650
More than £5 million up to £10 million £67,050
More than £10 million up to £20 million £134,550
More than £20 million £269,450

Certain exemptions and reliefs from the ATED charge are available, including for bona fide property developers or investors letting to third parties. However, all claims for relief must be made in the return, either through a full ATED return or a simplified form known as a Relief Declaration Return.

A penalty regime exists for the late filing of ATED returns.

1 April 2022: a new valuation date

For the past five chargeable periods, the ATED charge has been based on the value of the property at 1 April 2017 (or on acquisition if later).

However, a new valuation will be required for 2023/24 ATED returns. Residential properties owned by non-natural persons must be revalued as at 1 April 2022. This value will then apply to ATED returns for the next five chargeable periods (starting from 2023/2024).

With house prices having increased significantly since 2017, more properties will come within the scope of the ATED charge. Therefore, companies (and other non-natural persons) will need to obtain an open market value of their existing residential properties as at 1 April 2022.

If the revaluation process has not yet been undertaken, it is advisable that this is obtained as soon as possible to ensure that companies (and other non-natural persons) are aware in advance of any potential ATED payments or increased payments that will be required in April 2023. For properties acquired after 1 April 2022, the ATED valuation will be based on the acquisition date.

HMRC confirmed in October 2022 that they intend to write to taxpayers who still own a relevant property valued above £500,000 in the 2022/23 return period to advise them of the requirements to revalue and the impact that will have on their future returns. Taxpayers will also have the opportunity to use HMRC’s Pre-Return Banding Check (PRBC) process (if they meet the criteria) to secure HMRC’s agreement of a valuation in advance of submitting their return.

HMRC have confirmed that the valuation must be a specific amount rather than a ‘within the range of’ type valuation. The valuation can either be undertaken by a professional surveyor or you can self-assess.

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

Contact us

Caroline Fleet
Caroline Fleet
Head of Real Estate