ATED is an annual tax charge, mainly by companies, that own UK residential property valued at £500,000 or above.
But the ATED regime also applies to:
- A partnership with a corporate member(s), and
- A collective investment schemes, like a Unit Trust or open ended investment company.
The ATED threshold was reduced to £500,000 on 1st April 2016, and an ATED return is required for the chargeable period 1st April 2016 to 31st March 2017, if the property is a dwelling, i.e. all of part of it is used or can be used, or could be used as a residence, e.g. house or flat, and it is also suitable for use as a dwelling and is valued at more than £500,000. If the property is flats, then each flat is valued separately.
Non-residential properties are outside the scope of ATED. There are also some other properties that are not classed as dwellings, which are as follows :
- Hotels
- Guest houses
- Boarding school accommodation
- Hospitals
- Student halls of residence
- Military accommodation
- Care homes
- Prisons
The filing date for the ATED returns is 30th April 2016, and there is no extension to this deadline at present, although last year HMRC (HM Revenue and Customs) relaxed the rules and allowed submissions by 31 October. The payment date of the charge, if you are chargeable to ATED is 30th April 2016.
There are various reliefs available against the ATED charge, but even if these is no tax payable because you are eligible for one of the reliefs you must submit a return and make a claim for the relief by completing a Relief Declaration Return, and again the deadline date for the submission of this return is 30th April 2016. These returns can be completed onscreen and submitted to HMRC. The relief that can be claimed is as follows :
- Let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner.
- Open to the public for at least 28 days a year on a commercial basis e.g. stately homes.
- Being developed for resale by a property developer.
- Owned by a property trader as the stock of the business for the sole purpose of resale.
- Repossessed by a financial institution as a result of its business of lending money e.g. equity release schemes.
- Being used by a trading business to provide living accommodation to employees, where employee has less than 10% interest in the company e.g. key executives working in UK.
- A farmhouse occupied by a farm worker or a former long-serving farm worker.
- Owned by a registered provider of social housing.
There are also exemptions for :
- Residential property owned by a charity and held for charitable purposes.
- Properties held by public bodies, and bodies established for national purposes.
- Properties conditionally exempt from IHT.
There are various penalties for not completing an ATED return by 30th April 2016, and these follows the self assessment rules :
- Initial penalty of £100 for the late submission of the return.
- Daily penalties of £10 per day, after your return is 3 months late.
A further penalty of £300 or 5% of HMRC estimate of your liability to the ATED tax, after your return is 6 months late, whichever is higher.
A second further penalty of £300 or 5% of HMRC estimate of your liability to the ATED tax, after your return is 12 months late, whichever is higher.
It appears that HMRC have been taking a very strict line on this and are charging penalties for late returns even where there is no tax due. It is therefore important to review your own position to find out whether the reduced ATED threshold has any impact for your business.