High value residential property let by a company – does the ATED apply?

The Annual Tax on Enveloped Dwellings (ATED) is an annual property tax on properties valued above £500,000. The levy does not apply to individual property owners. Still, it may apply to properties valued above £500,000 owned by companies, partnerships with at least one corporate partner, or collective investment schemes (such as a unit trust or an open-ended investment company). So, for example, if two partners own a £1 million property, one is an individual, and the other has at least one corporate partner, only the individual owner pays the ATED.

ATED is payable annually in advance. The tax must be paid on the first day of the following year, and an ATED return that includes the period from 1 April to the next 31 March must be filed on or before 30 April every year.

There are many exemptions to the ATED charge. The letting exemption is one. In addition, there is no ATED charge if the property is commercially rented and not inhabited (or available for habitation) by the owner or his family.

If this exam is passed, relief will be granted. However, the relief must be claimed electronically via ATED. Assuming that the company’s high-value residential properties are completely leased commercially, filing a Relief Declaration Return is necessary to eliminate any ATED liability.