ATED - 2023/24 is a revaluation year

ATED (Annual Tax on Enveloped Dwellings) is a tax based on a residential property’s value, and for 2023/24 ATED filing and payment purposes, a revaluation of the property at 1 April 2022 is now required. This valuation will form the basis for the ATED charge for properties (held at 1 April 2022) for the next five years.

Updated revaluations are likely to take many properties over the £500k threshold and into the ATED regime for the first time in 2023/24 and, five years on from the last valuation, many properties could go up a band (see below).

It is possible for the company making the return to use a director’s valuation of the property based on desk research, but it should be remembered that if HMRC challenges a return and the valuation proves to be inaccurate, penalties may be charged. HMRC applies a risk-based approach when dealing with ATED, and a formal robust revaluation from a property professional may be required if the market value of a dwelling is close to the ATED threshold limits (see below).

What is ATED?

The charge applies to UK residential properties held by non-natural persons, subject to some reliefs and exemptions for buildings used for genuine commercial activities or charitable or public purposes. Companies, partnerships with a company as a member, and collective investment schemes must file 2023/24 ATED returns for affected properties by 30 April 2023, and pay any tax due for 2023/24 by that date.

Many overseas companies owning UK property will now have to provide information on such properties, as they are now legally required to register at Companies House if they own UK residential property - read more.

The 2023/24 ATED rates are:

Property value*	Charge
£500,001 - £1m	£4,150
£1m - £2m	£8,450
£2m - £5m	£28,650
£5m - £10m	£67,050
£10m - £20m	£134,550
Over £20m	£269,450

 

 

 

 

 

 

* On 1 April 2022 or on subsequent acquisition.

It is important to remember that returns must be filed for relevant properties even where no ATED is due because a relief is being claimed, for example in respect of properties held as investments rented to third parties, or held as trading stock for dealing or development.

If a relief is being claimed, the appropriate ATED Relief Declaration Return can be filed instead of an ATED return. Failure to make a return and claim the appropriate relief could lead to an ATED charge arising under the discovery rules, with the taxpayer being time barred from making a claim for relief. A failure to make a return can therefore lead to an ATED charge arising where relief would otherwise have been available.

Enforcement

Under Sch 55 FA 2009, a taxpayer is liable to a fixed penalty of £100 for failing to deliver a return by the filing date. A further penalty of £10 per day is due for each day that the failure continues during the period of 90 days thereafter. If the failure continues after the end of six months, then the penalty is the higher of 5% of any tax due or £300.

The penalties for filing a Nil liability ATED Return or Relief Declaration Return more than six months late therefore total £1,300.

A penalty is not due if the taxpayer can demonstrate a reasonable excuse for the failure. However, the First-tier Tax Tribunal has rejected ignorance of the law as a reasonable excuse, and rejected the defence of proportionality in relation to fixed penalties, for Nil ATED returns.