Annual Tax on Enveloped Dwellings (ATED) valuation date changes

Are you aware of the valuation date changes for Annual Tax on Enveloped Dwellings (ATED)?

What is ATED?

ATED is an annual tax payable in advance by companies and other non-natural persons (including partnerships with corporate members) who own an interest in UK residential property valued at over £500,000.

The charge applies to houses, self-contained flats, gardens and mixed-use properties. Certain properties such as hotels, guest houses and care homes are specifically excluded.

ATED also extends to property developers and letting businesses but there are reliefs available to reduce the ATED charge to nil. For example, a claim for relief can be made where a property is rented on a commercial basis to an unconnected party. It is important to note that the claim for relief is not automatic and a Relief Declaration Return must be submitted to HMRC in order to make the claim.

What are my compliance obligations?

ATED returns are required for the period to 31 March each year. The next period runs from 1 April 2023 to 31 March 2024. The return must be submitted to HMRC by 30 April 2023. Any tax payable is also due by this date.

Changes to note for 2023/24 reporting

For the five chargeable periods commencing 1 April 2023, a new property valuation will be required. The valuation must reflect the value at 1 April 2022, therefore where properties have not been revalued at this point, it is recommended that a valuation is sought as soon as possible.

With property valuations in some areas of the country having increased since the last valuation date of 1 April 2017, it is possible that a property which was previously outside the scope of ATED is now subject to the ATED charge. Similarly, you may find your property has decreased in value and is no longer within the scope of ATED. It is therefore recommended that companies seek a valuation of existing residential properties as of 1 April 2022, or as close to this as is practicable, to ensure advance awareness of any new or increased payments.

How can AAB assist me?

For further information regarding valuations or the completion and submission of PRBC’s for ATED purposes, please do not hesitate to contact Michaela McCombie or your usual AAB contact for assistance.