Annual Tax in Enveloped Dwellings ATED 2014 15

Published / Last Updated on 14/06/2015

Annual Tax in Enveloped Dwellings ATED 2014-15

Annual Residential Property Tax Explained

Officially known as an Annual Tax on Enveloped Dwellings (ATED), it is a yearly tax on high value property..

This annual residential property tax, technically a ‘mansion tax’ or wealth tax on high value properties in the UK owned not by people directly but owned by corporate entities.

What is a corporate entity? 

A collective investment scheme (unit trust, investment trust, OEIC, bond etc), a limited company or a partnership (if one of the partners is a company).

Why has this tax started? 

It has started because many wealthy UK and overseas property owners buy properties in this way.  By setting up a corporate structure, they are able to sell on their property possibly without liability to taxes because it not the property that is sold, it is the shares that are transferred.

  • Stamp Duty – the high rate of Stamp Duty 7% for properties over £2m is saved - although this has now been blocked with 15% Stamp Duty payable by residential property purchases by 'non natural' persons - see Stamp Duty Rates
  • Capital Gains Tax – if “business” is sold, rollover relief is available where no capital gains tax is payable if profits in a business are reinvested back into another “business”.

When did ATED start? 1 April 2013

How much is ATED?  It is a yearly flat rate tax payable in property value bands:

*Budget 2014 dramatically changed ATED to introduce two new tiers:

  • 1st April 2015 - Properties valued at £1,000,000 plus will be subject to ATED at £7,000
  • 1st April 2016 - Properties valued at £500,000 plus will be subject to ATED at £3,500
proposed *ATED 2016 Payable by 30/4/2016

Property Value at 01/04/2016

Tax Payable

£500,000 to £1 million

£3,500

£1 million to £2 million

£7,000

£2 million to £5 million

£15,000

£5 million to £10 million

£35,000

£10 million to £20 million

£70,000

£20 million and over

£140,000

 

proposed *ATED 2015 Payable by 30/4/2015

Property Value at 01/04/2015

Tax Payable

£1 million to £2 million

£7,000

£2 million to £5 million

£15,000

£5 million to £10 million

£35,000

£10 million to £20 million

£70,000

£20 million and over

£140,000

 

ATED 2014 Payable by 30/4/2014

Property Value at 01/04/2014

Tax Payable

£2 million to £5 million

£15,000

£5 million to £10 million

£35,000

£10 million to £20 million

£70,000

£20 million and over

£140,000

 

ATED 2013 Payable by 31/10/2013

Property Value at 01/04/2013

Tax Payable

£2 million to £5 million

£15,000

£5 million to £10 million

£35,000

£10 million to £20 million

£70,000

£20 million and over

£140,000

 What if I own for part of the year?  If you own for part of the year, you will pay a proportion of the ATED.

Exemptions

  • Historic houses etc. where the property is owned by a corporate structure and is available for public access and viewing at least 28 days per year.
  • Farmland residential property owned by a corporate structure where a worker lives in the property.
  • Charitable property.
  • Property bought for development.

How is a property valued?

  • The property must be value at market selling price as at 1 April 2012 and then every 5 years.
  • ATED payable is then based upon the scale above.

When is ATED payable?

  • For 1 April 2013 valuation, it is due on 31 October 2013.
  • Then subsequent 1 April valuations in the following years tax is payable within the month i.e. 30 April of the same year and so on.

 

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