What is ATED?

The acronym stands for Annual Tax on Enveloped Dwellings. The tax was introduced in April 2013 to discourage ownership of property in an “envelope” that could avoid payment of Stamp Duty Land Tax on a subsequent sale.

ATED is a tax on companies and so-called Non-Natural Persons (NNPs) who have an interest in a residential property in the UK that was valued at £2m or more on 1 April 2012, or with a purchase price over £2m if acquired on or after 1 April 2012.

A Non-Natural Person is an owner who is not an individual and includes certain partnerships and collective investment schemes.

The ATED tax due for 2013-14 depends on the property value:

  • £2,000,001 to £5m - £15,000
  • £5,000,001 to £10m - £35,000
  • £10,000,001 to £20m - £70,000
  • Over £20m - £140,000

For the first year, 2013-14, the ATED return was due by 1 October 2013 and the tax is due to be paid by 31 October 2013. For subsequent years the ATED return and payment is due by 30 April in the year of assessment. Thus, for 2014-15 the return and payment will need to be made by 30 April 2014.

The tax is only due for the period of ownership in a tax year.

A dwelling might get relief from ATED if it is:

  • Let to a third party on a commercial basis and isn't, at any time, occupied (or available for occupation) by anyone connected with the owner.
  • Open to the public for at least 28 days per annum. If part of a property is occupied as a dwelling in connection with running the property as a commercial business open to the public, the whole property is treated as one dwelling and any relief will apply to the whole property.
  • Part of a property trading business and isn't, at any time, occupied (or available for occupation) by anyone connected with the owner.
  • Part of a property developers trade where the dwelling is acquired as part of a property development business the property was purchased with the intention to re-develop and sell it on and isn't, at any time, occupied (or available for occupation) by anyone connected with the owner.
  • For the use of employees of the company, for the company's commercial business and where the employee does not have an interest (directly or indirectly) in the company of more than 10 per cent. The employee's duties must not include services for any present or future occupation of the property by someone connected with the company. The relief is also available where a partner in a partnership does not have an interest of more than 10 per cent in the partnership.
  • A farmhouse, if it is occupied by a qualifying farm worker who farms the associated farmland, a former long-serving farm worker or their surviving spouse or civil partner.
  • A dwelling acquired by a financial institution in the course of lending.
  • Owned by a provider of social housing.

There are also a number of exemptions from the tax, most significantly, charitable companies using the dwelling for charitable purposes.

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