A company which holds UK residential property that falls within the annual tax on enveloped dwellings (ATED) charge will need to carry out a revaluation of the property from 1 April 2022.
The ATED rules apply to properties with a value in excess of £500,000, with a fixed annual charge applied based on the value of the property. With rapidly increasing prices over the last five years, companies may find that they will fall into the ATED regime for the first time following the revaluation.
The filing and payment deadline for the 2022/23 tax year is 30 April 2022 and the charge for this year will be based on the 2017 value of the property. A revaluation of the property occurs every five years, with the 1 April 2022 revaluation first taking effect for the 2023/24 tax year.
You can work out the value yourself or you can use a professional valuer, but it must be based on an open-market willing buyer, willing seller basis. If you think that your property may be close to the threshold you should obtain a valuation for April 2022, to confirm whether you may now fall within the rules. A valuation should also be obtained for properties currently within the ATED regime to determine the appropriate banding and charge.
Please note that HMRC can challenge your valuation and if they find that it is wrong, they can charge penalties and interest. If you are close to the threshold, a professional valuation may provide more comfort, or a pre-return banding check (PRBC) could be obtained from HMRC.
A PRBC can be requested from HMRC where the estimated value of a dwelling is within 10% of an ATED threshold. This will confirm HMRC’s view as to whether ATED applies, and if so at what rate. Requests for PRBCs should be submitted as far in advance of the return due date as possible to avoid late filing. More information and the form to request a PRBC can be found here.
The ATED charge will depend on the value of the property. For 2022/23 tax will be due as follows:
| Property Value (£) |
1 April 2022 – 31 March 2023 ATED |
| 500,001 – 1,000,000 |
£3,800 |
| 1,000,001 – 2,000,000 |
£7,700 |
| 2,000,001 – 5,000,000 |
£26,050 |
| 5,000,001 – 10,000,000 |
£60,900 |
| 10,000,001 – 20,000,000 |
£122,250 |
| 20,000,001 + |
£244,750 |
Not all properties will be subject to a charge, however, as there are certain exemptions and reliefs which apply, but the company may still be required to file a return to claim the relevant relief. One of the most common reliefs is for properties let to a third party on a commercial basis with no occupation by anyone connected to the owner.
If you would like specific advice on whether the charge may apply to your company or if the company may be eligible for any exemptions or reliefs, please get in touch and we would be happy to assist.