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Farming & Rural Business Community

Annual Tax on Enveloped Dwellings (ATED)

Author: David Missen

Published: 02 Nov 2021

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What you need to know before the coming revaluation.

Members and many of those clients potentially affected will be well aware of the ATED charge which was introduced with effect from 21 March 2012. This charges tax on residential properties owned by non-natural persons (principally companies and partnerships including a company). After initially being set to include properties valued at over £2m, it now has a minimum trigger value of £500,000 for each property. The tax payable will vary between £3,700 and £237,400 per annum depending on the value of the property. There are exemptions for many categories of property including those owned by a property rental business or property developer, farmhouses and property occupied by certain employees. In these cases a return will still need to be filed in order for the exemption to be granted.

A problem will, to some extent, be looming for Spring 2022. Property valuations were initially based on market conditions when the legislation was introduced in 2012, with five yearly revaluations being due thereafter. During the last five years, rural property prices will have risen significantly and in some parts of the country even quite modest property will be worth more than the £500,000 trigger, so on this second revaluation many properties hitherto below the deminimis will need to be reported, even if exemptions are available.

In addition, existing properties already “within the net” which are not eligible for exemption may move to a higher band with a much more punitive charge. By way of reminder, the bands for 2021/22 were as follows:

Property value  Annual charge
More than £500,000 up to £1 million £3,700
More than £1 million up to £2 million
£7,500
More than £2 million up to £5 million 
£25,300
More than £5 million up to £10 million
£59,100
More than £10 million up to £20 million
£118,600
More than £20 million
£237,400

It is also likely that the charge will be increased for 2022/23.

The return and payment for 2022/23 will be due on 30 April 2022. Given that Christmas, New Year, self-assessment filing dates and possibly further COVID-19 disruption will all occur in the meantime (and with the possibility that PI claims could result from failure to submit the ATED returns on time), putting the necessary valuations in hand sooner rather than later may be advisable.

*The views expressed are the author’s and not ICAEW’s.
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