Does your company need to file an ATED Return?

Does your property company need to file an ATED Return?

With the arrival of April comes that time of year when companies are reminded to think about ATED (Annual Tax on Enveloped Dwellings) filings.

ATED is a regime applicable to all non-natural entities (such as companies, partnerships with a corporate partner, or collective investment schemes) possessing UK residential properties valued over £500,000. It applies equally to companies that only own properties as well as those trading businesses holding the properties as an investment.

The £500k figure is tested against the value as at 1 April 2022, or the acquisition date if later, and this encompasses both UK and offshore structures.

Who needs to pay ATED?

Companies that own UK residential properties worth more than £500k that do not fall within the relief provisions.

The properties are let to unconnected third parties – do I still need to file?

Yes, an ATED filing will be required in order to claim the relief. There are other reliefs available so if you are not sure which may apply to your company, please get in touch.

What are a company’s Annual Tax on Enveloped Dwellings (ATED) responsibilities?

Every year the window to submit the ATED return opens on 1 April, with penalties for late filing after 30 April and this year is no exception.

This means that the window to submit a 2024-25 ATED return or relief returns has already opened. If an ATED charge is payable, it must also be paid by 30 April 2024.

How is ATED different to other taxes?

In contrast to other taxes, ATED is a tax that looks forward and it covers the period from 1 April to 31 March each year.

For the 2024-25 period, the following ATED charges apply based on property valuation bands:
• £500,001 – £1,000,000: £4,400
• £1,000,001 – £2,000,000: £9,000
• £2,000,001 – £5,000,000: £30,550
• £5,000,001 – £10,000,000: £71,500
• £10,000,001 – £20,000,000: £143,550
• £20,000,001 and above: £287,500

It’s important that offshore companies also comply with their Overseas Entities Register obligations. The initial registration deadline with Companies House was 31 January 2023, and there is a requirement to annually update this.

What should you do if you own UK property through an offshore entity?

If you own a UK property through an offshore entity it is important that you understand the UK reporting obligations. This includes UK Corporation Tax on property rental profits, filing of ATED returns, Capital Gains rebasing, stamp duty and Inheritance Tax rule changes.

What is classed as a ‘dwelling’?

Your property is classed as a dwelling if all or part of it is used, or could be used, as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.    Some properties are automatically not classed as dwellings. These include:

  • hotels
  • guest houses
  • boarding school accommodation
  • hospitals
  • student halls of residence
  • military accommodation
  • care homes

If you require help establishing whether your property is classed as dwelling please contact us for assistance.

Anand, RPGCC’s Corporate Tax Director added “ATED is, and has always been a complex area of tax. The reporting requirement comes around each year and there are several issues that must be considered. Careful thought and planning is required, and it is important to remember that what is right for one company might not be right for another. We have met with several clients in recent months who are opting to bring structures onshore and some are looking at restructuring which in turn has the potential to reduce the cost of running these kinds of structures”.

If you would like to speak to a member of our tax team about ATED or indeed any area of Property Tax, Corporate or Personal Tax planning, contact us on 020 7870 9050.  A member of our team is waiting to help.

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