1 October 2013 is the deadline for filing the first returns for the Annual Tax on Enveloped Dwellings (“ATED”) where the relevant conditions were met on or before 1 September 2013. Any tax due needs to be paid by 30 October 2013. If the conditions are satisfied after 1 September 2013, a return must be filed and any tax paid within 30 days from the date on which the charge applies.
ATED is a new tax. It applies to residential property valued at over £2 million which is held by a company, a partnership with a corporate member or collective investment scheme. Such properties will be subject to an annual charge unless there are any reliefs or exemptions available. These reliefs and exemptions are designed to prevent ATED from applying to genuine commercial activities, for example property rental or development. Unless an exemption applies, a return has to be submitted regardless of whether or not tax is payable due to the availability of a relief. The amount of tax payable each year ranges from £15,000 for homes valued at between over £2 million and £5 million to £140,000 for homes valued at over £20 million.
If ATED applies to a property, careful consideration should be given as to whether or not the disadvantages of the charge outweigh any other advantages associated with continuing to hold the property in this way. HMRC has recently issued technical guidance on ATED in pdf form. For further information on ATED please see our detailed briefing note below.
Private Client and Taxation Briefing Note – Annual Tax on Enveloped Dwellings September 2013