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Corporates holding UK property prompted to check ATED valuations

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Published: 01 Feb 2023 Update History

HMRC has sent letters to companies asking them to check whether the valuations they have used to determine annual tax on enveloped dwellings (ATED) liabilities since 2018 are correct.

ATED is payable in situations where a company (or certain other types of entity) hold UK residential property, and none of the various reliefs apply. The tax is generally calculated by reference to the relevant property value on the most recent valuation date (or when the property was acquired, if later).

Valuation dates are every five years – so far, on 1 April 2012, 1 April 2017, and 1 April 2022. Revaluations take effect for the first ATED chargeable period beginning after the valuation date. For example, liabilities for the ATED chargeable period 2018/19 and the following four periods are based on the 1 April 2017 valuation. Returns are due within 30 days of the start of the relevant chargeable period (eg, by 30 April 2023 for the 2023/24 period).

For illustrative purposes, the bandings and chargeable amounts for the period from 1 April 2022 to 31 March 2023 ranged from £3,800 for a property in the lowest band (more than £500,000 up to £1m) to £244,750 for a property in the highest band (worth more than £20m).

According to HMRC’s records, the bands used by the taxpayer in the returns for the ATED chargeable periods 2018/19 to 2022/23 may be incorrect. Recipients of the letters may need to tell HMRC about additional tax that is due by making a disclosure. To start the disclosure process, HMRC requests that recipients complete and return the enclosed notice of intention and certificate. It also requests recipients to give a reason if they think they do not need to make a disclosure.

ATED for the 2023/24 chargeable period – and the following four periods – will be based on the property valuation as at 1 April 2022, if the property has been held since before that date. Note that a revaluation may cause a property to jump to a higher or lower band than it was in previously. Any entities that have not carried out or commissioned revaluations of their properties as at 1 April 2022 should do so as a matter of urgency to ensure that they base future ATED liabilities on the correct valuation. 

Taxpayers holding a property with a value falling within 10% of a banding threshold can request a pre-return banding check from HMRC. HMRC will normally respond to a request within 30 working days of receiving the form. However, HMRC might take longer to reply during busy times.

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