For further assistance or to discuss your specific circumstances, please contact us at [email protected]. We are here to help you navigate your ATED obligations efficiently and ensure compliance with HMRC requirements.
Summary Guide to Annual Tax on Enveloped Dwellings (ATED)
3 March 2025
The Annual Tax on Enveloped Dwellings (ATED) is a tax levied on UK residential properties valued above a certain threshold that are owned by companies, partnerships with corporate members, or collective investment schemes. Below is a concise guide to help you understand the key aspects of ATED, including thresholds, reporting requirements, and available reliefs.
1. Thresholds
- Valuation Threshold: ATED applies to UK residential properties valued at £500,000 or more.
- Valuation Dates: Properties must be revalued every five years. The most recent valuation date was 1 April 2022, and this valuation will apply for the chargeable periods from 1 April 2023 to 31 March 2028.
- If the property value exceeds the threshold, ATED may be payable unless reliefs apply.
2. ATED Charges (2025/26 Rates)
The annual charge depends on the property’s value band. Below are the charges for the 2025/26 period:
Chargeable amounts for 1 April 2025 to 31 March 2026
| Property value | Annual charge |
| More than £500,00 up to £1 million | £4,450 |
| More than £1 million up to £2 million | £9,150 |
| More than £2 million up to £5 million | £31,050 |
| More than £5 million up to £10 million | £72,700 |
| More than £10 million up to £20 million | £145,950 |
| More than £20 million | £292,350 |
3. Reporting Requirements
- Filing Returns: An ATED return must be submitted for each chargeable period (1 April to 31 March) if the property is within the scope of ATED.
- Deadline for Properties Owned on 1 April: Returns must be filed by 30 April following the start of the chargeable period.
- Deadline for Properties Acquired Partway Through the Year: If a property is acquired partway through the chargeable period, the ATED return must be submitted within 30 days of acquisition.
- Newly Constructed or Converted Dwellings: For newly constructed or converted dwellings, the return must be submitted within 90 days of the property coming into existence for Council Tax purposes or being first occupied.
- Relief Declaration Returns: If a property qualifies for relief, a Relief Declaration Return must be submitted instead of a full ATED return.
- Online Filing: Returns can be submitted via the ATED online service. If online submission is not possible, paper forms can be requested from HMRC.
4. Reliefs
Certain types of properties or uses are eligible for relief from ATED. However, a Relief Declaration Return must still be submitted to claim the relief. Common reliefs include:
| Relief Type | Description |
| Property Rental Business | Properties rented out on a common commercial basis to third parties |
| Property Developers | Properties held as stock for development or resale |
| Property Traders | Properties held as trading for resale |
| Dwellings Open to the Public | Properties open to the public for at least 28 days a year |
| Farmhouses | Farmhouses occupied by farm workers or retired farm workers |
| Employee Accommodation | Properties occupied by employees required to live there for their work |
| Financial Institutions | Properties acquired in the course of lending (e.g. repossessions) |
5. Penalties
Failure to file an ATED return or Relief Declaration Return on time can result in penalties:
- Late Filing Penalties: Fixed penalties for missing the deadline, plus daily penalties if the delay continues.
- Late Payment Penalties: Interest and penalties apply if the ATED charge is not paid by the due date.
6. Key Points to Remember
- Valuation: Ensure your property is correctly valued and revalued every five years.
- Reliefs: Even if relief applies, you must file a Relief Declaration Return to avoid penalties.
- Deadlines: File your return and pay any ATED charge by 30 April each year, or within 30 days of acquisition for properties purchased partway through the year.
- Professional Advice: Seek advice if you are unsure about your ATED obligations or eligibility for reliefs.
