The ATED regime is nothing new, in fact it has been around since April 2013. However, changes which come into effect from 1 April 2018 are likely to bring a lot more properties into the charge.
The regime levies an annual tax charge on ‘non-natural persons’, i.e. companies and trusts, who own UK residential property over a certain value.
When the charge was introduced for the 2013/14 financial year (1 April 2013 to 31 March 2014), it was only payable for relevant properties valued at more than £2mn on 1 April 2012. The valuation at which the charge kicked in dropped for the 2015/16 financial year to include properties valued at more than £1mn on 1 April 2012. The threshold reduced again for the 2016/17 tax year to include properties valued at £500,000 or more on 1 April 2012. Where a property was purchased after 1 April 2012, the market value at the date of purchase would be used in place of the April 2012 valuation.
Crucially for the 2018/19 financial year – which commences on 1 April 2018 – whilst the valuation of £500,000 remains unchanged the valuation date moves to 1 April 2017 or the date on which the property was purchased, if later. This is likely to bring a number of properties which were worth, say £400k in 2012, into the charge going forward.
For owners of relevant properties, a return needs to be filed annually by 30 April in the financial year, and the annual charge paid by that date.
The current charges are as follows:
|Property value||Annual charge|
|More than £500,000 but not more than £1 million||£3,500|
|More than £1 million but not more than £2 million||£7,050|
|More than £2 million but not more than £5 million||£23,550|
|More than £5 million but not more than £10 million||£54,950|
|More than £10 million but not more than £20 million||£110,100|
|More than £20 million||£220,350|
The good news is that if the properties meet certain criteria, they are exempt from the charge – although a return will still need to be completed to claim the exemption.
The principal exemptions are that the property is either:
- 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
- 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
At Cardens, our team will be happy to review any properties you may own via a company or trust and assess whether the charge would apply and if a return is required. We can then make any required submission’s on your behalf and advise how much you may need to pay HMRC.
As this annual charge can be punitive, we can also talk you through your options in terms of changing the ownership of the property to avoid the charge and the tax implications of that.
If you have any questions, please do not hesitate to contact us.