Companies must revalue residential properties for ATED

What is ATED?

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. Returns must be submitted on or after 1 April in any chargeable period. There are reliefs and exemptions from the tax, which may mean you do not have to pay.

The deadline for companies that own UK residential properties to revalue and tell HMRC if any are worth more than £500,000 is fast approaching

 Owners of properties held in companies have until 31 March to revalue their property in compliance with the Annual Tax on Enveloped Dwellings (ATED) rules which require a revaluation every five years.

The revaluation can be carried out by the owner or by a professional valuer and must be based on the value of the property on 1 April 2022, or the date of acquisition if this was after 1 April 2022.

This valuation sets the rate of annual payment until the next revaluation year. Once a property has been revalued, the annual charge is applicable for the next five years.

In line with other tax charges, the ATED rates for 2023-24 have increased between 8% and 12%.

The charge is dependent on the property’s value and starts at £4,150 for properties valued between £500,000 and £1m.

This increases to £28,650 a year for properties valued between £2m and £5m, £122,250 between £10m and £20m, and £269,450, up from £244,750 in 2022-23, for properties worth more than £20m.

Companies that own residential properties in the UK, which were previously worth less than £500,000, should ensure they undertake a revaluation and notify HMRC by completing an ATED return if any of their properties now exceed the threshold.

The deadline for submitting ATED returns to HMRC and making any payments for the 2023 to 2024 period between 1 and 30 April 2023 is 31 March 2023. If this is missed, HMRC will issue a penalty 31 days after the due date.

The penalties for failing to pay ATED in full and on time are:

• an initial penalty of 5% for tax unpaid at the penalty date; and
• two further penalties of 5% each for tax unpaid at five and 11 months after the penalty date.

Morris Graham, HMRC’s head of stamp taxes policy, said: ‘It is essential that companies act quickly to complete the revaluations of their residential property portfolios, however large or small, and pay what they owe.

‘I urge companies who are new to the Annual Tax on Enveloped Dwellings to familiarise themselves with the guidance on gov.uk.’

Chargeable amounts for 1 April 2023 to 31 March 2024

HMRC guidance

Annual Tax on Enveloped Dwellings

ATED reliefs and exemptions

Submit your Annual Tax on Enveloped Dwellings return