The Annual Tax on Enveloped Dwellings (ATED) was introduced from 1 April 2013 and affected companies and partnerships with corporate partners, that hold residential property with a value over £2 million. This limit was reduced to £1m from 1 April 2015 and will be further reduced to £500k from 1 April 2016.
Businesses therefore need to check if they will be “caught” by the reduced thresholds and need to submit a return.
If a partnership has a corporate partner then the whole value of the property is included in ATED. If a company owns, say, only 10% of a property then the whole value of the property is included in ATED.
If a company and a connected person own different interests, i.e. the company owns a lease and the connected person the freehold or vice versa, the value of the aggregated interests will be the relevant value for ATED. This only applies if the value of the company’s interest is in excess of £500k for dwellings valued at over £2m and £250k for properties valued at under £2m. Therefore, if any companies have a tenancy over, or leasehold interest in, a dwelling this should be reviewed.
Reliefs are available from the annual charge, subject to certain conditions, but need to be claimed on the relevant form as relief is not automatic. Examples where relief might be available for farming businesses are:
b) rental property;
c) if occupied by employees (who have no more than a 10% interest in the company).
The form to claim relief was due to be issued in July but has not yet been issued by HM Revenue & Customs. Therefore, it is not yet known how extensive the relief form is.
Businesses should consider whether the reduced threshold will mean they need to submit an ATED form or claim relief to avoid the annual charge. ATED chargeable periods are for the 12 months from 1 April to 31 March.
For 2015, the ATED form will need to be submitted by 1 October 2015 and any charge paid by 31 October 2015, for returns between the value band of £1 million and £2 million.
For 2016, the form will need to be submitted by 30 April 2016 and any charge paid by 30 April 2016.