As a property investor, should you be doing ATED returns?

As a property investor, should you be doing ATED returns?

By Published On: 28 June 2021Categories: Limited Company, Tax

What is an ATED?

An Annual Tax on Enveloped Dwellings, or ATED is an annual tax that’s payable by companies that own UK residential property valued at more than £500,000. If you’re a UK landlord you’ll need to complete an ATED return if your property:

  • Is owned wholly or partly by:
  • A company
  • A partnership where any of the partners is a company
  • A collective investment scheme – eg a unit trust or an open ended investment vehicle

When is the tax return and payment due?

The tax return must be submitted on or after April 1st in any chargeable period. Should you purchase an ATED property, your tax return and payment will be due within 30 days of purchase, and 90 days if the property is a new construction.

What is the ATED charge?

The annual charge is as follows (and is payable in advance):

ATED charge for the year commencing: 1 April 2021 1 April 2020 1 April 2019 1 April 2018 1 April 2017
Property value
£500k-£1m £3,700 £3,700 £3,650 £3,600 £3,500
£1m-£2m £7,500 £7,500 £7,400 £7,250 £7,050
£2m – £5m £25,300 £25,200 £24,800 £24,250 £23,550
£5m – £10m £59,100 £58,850 £57,900 £56,550 £54,950
£10m-£20m £118,600 £118,050 £116,100 £113,400 £110,110
£20m+ £237,400 £236,250 £232,350 £226,950 £220,350

What are the reliefs and exemptions which may mean you don’t have to pay?

You may find that you’re able to claim relief if your property meets the following criteria:

  • Your property is publically open for at least 28 days per year
  • Is in the process of being developed for resale by a property developer
  • Let to a third party on a commercial basis, without being occupied by anyone connected to the owner
  • Hasn’t been acquired under a regulated home revision plan
  • Owned by a property trader as stock of their business for the sole purpose of resale
  • Has not been repossessed by a financial institution as a result of its business of lending money
  • Being used to provide living accommodation to certain qualifying employees by a trading business
  • Is a farmhouse that’s occupied by a farm worker or a former long-serving farm worker
  • Is owned by a registered provider of social housing or a qualifying housing co-operative

What’s also not classed as a ‘dwelling’?

You will be exempt from completing an ATED return if your property is one of the following:

  • A hotel
  • Guest house
  • Boarding school accommodation
  • Hospital
  • Student halls of residence
  • Military accommodation
  • Care homes
  • Prisons

Whilst you may be exempt, you will still need to submit a return minus any paid tax. If you’re eligible for the reliefs listed then you’ll need to submit a Nil return to HMRC, and request the relief by completing a relief claim declaration form. Be aware that this must be done by April 30th for each period.

What happens if returns and payments are made late?

HMRC will issue you separate fines for both the return and the payment if either are made late.

What’s the full process ATED submission and payment?

Step 1 – Confirm whether your property is an enveloped dwelling or not

Step 2 – Check to see if you’re eligible for any exemptions, and claim them

Step 3 – Register online for the ATED service

Step 4 – Make a note of the 15 digit ATED reference number provided to you by HMRC (it will be displayed on the ATED service homepage)

Step 5 – Make a claim in case reliefs are available

Step 6 – Submit a return where no charge is due

Step 7 – If ATED is applicable and a payment is due, complete and file your return online

Step 8 – Make your full ATED payment – then that’s it! You’re done for another year

Final thoughts from Vantage Accounting

If you’re new to being a landlord and are still getting your head around what you need to do to ensure you stay on the right side of the taxman, we’re here for you. Specialising in the complex needs of landlords we’re here to help you navigate the sometimes confusing world of tax, to ensure you pay what’s due in the most tax efficient way possible. Get in touch today to find out more, or take a look at our buy-to-let landlord accounting services.

Note: All the information and advice in this blog post was correct at the time of writing.

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