Changes to the annual tax on enveloped dwellings regime

Written by Clarissa Akakpo on 6 March 2018

The Annual Tax on Enveloped Dwellings (ATED) regime was introduced to tax companies holding UK residential property valued over £500,000. The ATED regime has now completed its first  5 year cycle and  the fixed valuation date of 1 April 2017 will apply for the 2018/18 ATED filing period and the subsequent four ATED periods.

The 1 April 2017 revaluation is required for the properties that are held for personal use and pay the annual charge. The properties that qualify for an exemption do not need to be revalued if it is expected that they will continue to be exempt for the remaining period of ownership. However, it is recommended that a revaluation is obtained if one of the following applies:

  • When the property was last valued for ATED purposes, it was below the £500,000 threshold;
  • The property is close to an ATED band threshold and a revaluation may result in the property moving into a new band;
  • The property has been subject to substantial renovation works since the last valuation; or
  • The property is mixed-use and comprises of both residential and commercial parts.

The fixed revaluation is valid for 5 years and will be the relevant valuation date until the 2022/23 ATED year. The fixed ATED valuation ensures that the property will stay in the same ATED band until the next 5 year period commences. The only exception to this is where the property is extended or substantially redeveloped to the extent that it needs to be revalued to determine whether it should be placed in another band.

Many companies that were not within the scope of ATED because the properties were valued below £500,000 on 1 April 2012 may find that their property has a value of over £500,000, and they will now be required to file ATED returns for the first time from 1 April 2018.

If you are concerned that your company will be subject to the ATED regime for the first time from 1 April 2018 and you are unsure whether your company will qualify for a relief or you are considering removing the property from the structure, it is advisable to review the position now before the ATED filing period commences on 1 April 2018.

ATED Filing Period

The ATED filing period is the shortest of all HMRC tax regimes with a 30 day filing window between 1 April and 30 April at the commencement of each ATED year. The ATED filing period for the 1 April 2018 to 31 March 2019 year commences on 1 April 2018.

ATED Online System

HMRC has also introduced an ATED online filing system and HMRC expects that all ATED returns will be filed via the online system for the 2018/19 ATED year. The new system will allow agents to view payment reference numbers and information about the filing status immediately after submission of the ATED return. This development will improve the speed of filing ATED returns and the ease of rectifying errors in ATED returns.

The new simplified online system is a welcome development in the ATED filing process which is  a major shift in moving ATED reporting information to one place which is accessible by HMRC, agents and taxpayers.