Annual Tax on Enveloped Dwellings

ATED is an annual tax payable by companies, partnerships or trusts that own residential property in the UK.  The dwelling, or property, is called “enveloped” as the ownership sits within a corporate ‘wrapper’ or ‘envelope’.

Tax is paid on the value of the property, based on a band system.

The bands are as follows:

£500,001 to £1m

£1,000,001 to £2m

£2,000,001 to £5m

£5,000,001 to £10m

£10,000,001 to £20m

Over £20m

ATED applies to all residential properties (‘dwellings’), which includes residential parts of mixed-use and properties ‘capable of being a dwelling’ even if they are being occupied in an alternative way.

The law requires valuations to be on an ‘open-market, willing buyer, willing seller basis’, subject to the same definitions as Capital Gains and Inheritance Tax properties.

Property owners need to take care as certain changes to a property, or its ownership, can mean it becomes liable for ATED and can change the amount payable in a given year. It is a complex area of property tax legislation.

Our expert valuers can assist you with valuations of your property, to ensure the proper value is used when assessing the amount of tax payable each year: This is very important as penalties and interest can be applied by HMRC if they consider the wrong values are used.

Residential properties need to be valued every five years, meaning new valuations were required at 1st April 2022 for the correct banding to be used for 2023/24 returns.

For further information, please contact: Justin Bennett BSc (Hons) FRICS ACIArb



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