Annual tax on enveloped dwellings (ATED)

Most residential properties (dwellings) are owned directly by individuals. But in some cases a dwelling may be owned by a company, a partnership with a corporate member or other collective investment vehicle. In these circumstances the dwelling is said to be 'enveloped' because the ownership sits within a corporate 'wrapper' or 'envelope'.

ATED is a tax payable each year by companies on high value residential property (a dwelling). 

ATED charge

Property value at 1 April 2012 or acquisition 2017/18
More than £500,000 but not more than £1m £3,500
More than £1m but not more than £2m £7,060
More than £2m but not more than £5m £23,550
More than £5m but not more than £10m £54,950
More than £10m but not more than £20m £110,100
More than 20m £220,350

What is ATED?

Most residential properties (dwellings) are owned directly by individuals. But in some cases a dwelling may be owned by a company, a partnership with a corporate member or other collective investment vehicle. In these circumstances the dwelling is said to be 'enveloped' because the ownership sits within a corporate 'wrapper' or 'envelope'.

ATED is a tax payable each year by companies on high value residential property (a dwelling).

An ATED tax return is needed for your property if all of the following apply:

  • it's a dwelling (see below for definition)
  • it's situated in the UK
  • it was valued at more than £2 million on 1 April 2012, or at acquisition if later
  • it's owned, completely or partly, by a company, a partnership where one of the partners is a company, or a 'collective investment vehicle' - for example, a unit trust or an open ended investment company.

There are reliefs that could reduce the tax completely but you can only claim them if you complete and send in a return.

There are also a number of exemptions from the tax, most significantly, charitable companies using the dwelling for charitable purposes, which mean you may not have to file a return.

The amount of ATED is worked out using a banding system based on the value of your property. You need to find out which band the value of your property falls into. Properties will be revalued with effect from 1 April 2017 for use in the 2018/19 ATED year.

Disposals of ATED property are potentially subject to capital gains tax at 28%.

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

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If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com. Our new client services helpdesk is open Monday to Friday (8am to 6pm).

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