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Is Your Company Thinking of Buying a Residential Property? – Think ATED

Annual Tax on Enveloped Dwellings – ATED

The availability of residential property in the UK for occupation is a hot topic and ATED is one tool the government have to encourage corporate landlords to reduce the number of empty habitable properties around the country.

We have all heard the reports of properties in major cities sitting empty and the impact this has on the housing market.

So do I need to file an ATED Return you ask? … the following may help you answer this.

  • Are you a company or a corporate partner of a partnership owning a property?
  • Is it a residential ‘dwelling’?
  • Is the building valued at £500,000 or more?

If the answer is no then there will be no filing requirement under ATED, if the answer is yes then ask;

  • Is the building or entity specifically exempt? – For example hotels, guest houses, boarding school accommodation, hospitals, student halls of residence, military accommodation, care homes and prisons or, if your entity is a charity or the building is being used for a charitable purpose then it will be exempt from ATED.

So if the answer is yes there are no filing obligations under ATED, if however the answer is no then you will have a filing obligation and the final question is;

  • Is the building relievable?

ATED reliefs are available for certain businesses – rental businesses, property development businesses and property traders are a few examples where relief is available.

If your entity is eligible for relief be warned that this is not automatic and to claim it an ATED relief declaration return is required.  However, if no relief is available then a full ATED return must be filed and the tax paid.

Unlike most taxes ATED is an advance reporting regime and as such taking advice before deciding whether to acquire a residential property, convert a commercial property to residential use or develop a piece of land to residential use is key.

If you feel that this tax may apply to you, contact us and we will be happy to guide you through the process.