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A little known Property Requirement – Additional Tax On Enveloped Dwellings

Tax advice

I was having lunch yesterday with a friend of mine and his friend. His friend was the owner of over 50 properties some of which were owned through a Limited Company.

He was asking me questions about tax on his properties I asked him whether he was filing ATED returns and he was unaware that there was a requirement to file them.

An Annual Tax on Enveloped Dwellings (ATED) return is a tax return that certain UK companies and individuals must file if they own a UK residential property valued above a certain threshold, and it is held within a corporate structure or “envelope”. The purpose of the tax is to discourage the use of corporate structures as a way to avoid paying residential property taxes.

The ATED applies to residential properties that are worth over a certain amount, and the amount varies each year. For the 2022-23 tax year, the threshold is £500,000. The tax is charged on a sliding scale based on the property’s value, and it is payable annually.

The ATED return must be filed with HM Revenue and Customs (HMRC) every year by the deadline of 30 April. The return must include details of the property, such as its value, the name and address of the company or individual that owns it, and any relief that may be claimed. If the ATED return is not filed on time, or if the tax is not paid when due, penalties and interest may be charged.

There are certain reliefs one of which is that if the property or properties are let on a commercial basis. However  a return still needs to be filed even though it is a NIL return.

https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-reliefs-and-exemptions

Don’t fall foul of the legislation and this meeting just reminded me again how complex the tax code is in the UK and the need to make sure you hire a professional to take care of your tax affairs.

Disclaimer: Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.