What is ATED?
The Annual Tax on Enveloped Dwellings (ATED) is an annual tax charge on UK dwellings held by a Non-Natural Person (NNP) e.g. a company, which can be anywhere.
ATED applies to properties over a specific value unless a relief or exemption is claimed. It does not apply to individuals and directly held dwellings.
- The return must be filed in advance on or after 1 April, for the ‘chargeable period’
- i.e. a return for the period 1 April 2026 – 31 March 2027 must be filed on or after 1 April 2026
- The charge is payable in advance to, by 30 April for the chargeable period covered by the return.
- The charge is based on the ‘taxable value’ of the property:
- The properties are revalued for ATED every five years
- Different types of transactions may trigger a new valuation date
- Companies within the HMRC ATED rules can register themselves or appoint an agent to act on their behalf
See HMRC’s basic guidance here: Annual Tax on Enveloped Dwellings (ATED).
What is a dwelling for ATED purposes?
An ATED charge is only payable by NNPs owning a dwelling. A ‘dwelling’ is a property that is:
- Used all or in part as a residence, e.g. a house or flat
- Is in the process of being constructed or adapted as a residence
- Undeveloped land is only subject to a charge in some circumstances
- However, certain residential properties are not dwellings
Examples of properties that are not classed as dwellings:
- hotels
- guest houses
- boarding school accommodation
- hospitals
- student halls of residence
- military accommodation
- care homes
- prisons
For an ATED charge to apply the NNP must have a ‘chargeable interest’ in the property. Generally, that chargeable interest means: any estate, interest, right or power in or over land in the UK, and the benefit of an obligation, restriction or condition affecting the value of any of former.
Who is a Non-Natural Person (NNP)
An NNP is:
- A company
- A partnership with a corporate partner
- A collective investment scheme
How do I find the taxable value for ATED?
The taxable value for ATED purposes is the market value of the property concerned at the applicable valuation date.
HMRC ATED charges apply where a dwelling has a taxable value in excess of:
| £500,000 | From 1 April 2016 |
| £1,000,000 | From 1 April 2015 |
| £2,000,000 | From 1 April 2014 |
What are the valuation dates for ATED purposes?
You must revalue your property subject to ATED every 5 years in line with ATED legislation.
For the five years 2023-24 to 2027-28, the taxable value is:
- the market value on 1 April 2022, or if acquired after 1 April 2022, its acquisition cost.
For 2018-19 to 2022-23, the taxable value was:
- Its market value on 1 April 2017, or if acquired after 1 April 2017, its acquisition cost.
For 2013-14 to 2017-18 the taxable value was:
- The 1 April 2012 market valuation, or if acquired after 1 April 2012, its acquisition cost.
How much is the ATED charge?
The annual amount you need to pay is worked out using a banding system decided by HMRC based on the value of your property.
Chargeable amounts for 1 April 2026 to 31 March 2027 (2026-27)
| Property value | Annual charge |
|---|---|
| More than £500,000 up to £1 million | £4,600 |
| More than £1 million up to £2 million | £9,450 |
| More than £2 million up to £5 million | £32,200 |
| More than £5 million up to £10 million | £75,450 |
| More than £10 million up to £20 million | £151,450 |
| More than £20 million | £303,450 |
HMRC ATED Reliefs and Excluded Dwellings
A relief applies and so there is no tax charge for dwellings that are:
- Being redeveloped or held as stock for resale by a property developer
- Held by property rental businesses and let out to a third party
- Farmhouses occupied by working farmers
- Held by trading companies for the use of employees in the trade
- You may be able to claim relief for your property, if it is:
- open to the public for at least 28 days a year
- owned by a registered provider of social housing or a qualifying housing co-operative
Importantly, you cannot claim an ATED relief if the property is occupied by a non-qualifying individual.
A non-qualifying individual means:
- an individual who is entitled to an interest
- an individual (‘a connected person’) who is connected with a person entitled to the interest
- if a person is entitled to the interest as a member of a partnership, any person who is connected with a partner in that partnership
- an individual (the ‘relevant settlor’) who is a settlor of a trust of which a trustee is connected with a person entitled to the interest
- the spouse or civil partner of a connected person or a relevant settlor
- a relative of a connected person or of a relevant settlor, or the spouse or civil partner of a relative of a connected person or of a relevant settlor
- a relative of the spouse or civil partner of a connected person or of a relevant settlor
- the spouse or civil partner of a person falling within paragraph (7)
- an individual who is a major participant in a collective investment scheme or is connected with a major participant in a relevant collective investment scheme
ATED Exemptions
The following are exempt from ATED and do not have to submit a return or claim a relief either:
- Charitable companies
- Public bodies
- Bodies established for National Purposes
How to submit your ATED return and pay
If you’re not already registered with HMRC you’ll need to register for the ATED online service.
You can use the HMRC ATED online service to appoint an agent to act of your behalf, using the ATED1 form, to submit your returns online or by paper, or through an HMRC officer if there is an open compliance check.
ATED penalties and appeals
Penalties
HMRC may charge you a penalty and statutory interest (for paying late) if:
- you do not file your return on time
- you do not pay on time (a fixed amount and then tax-geared)
- you submit an inaccurate return
Appeals
During an HMRC ATED compliance check or dispute, if you disagree with an HMRC decision, for example a market valuation or penalty amount, you may be able to challenge it by appealing in a similar way to challenging other HMRC decisions.
You’ll have 30 days from the date of the decision to send your appeal to HMRC. New information and further representations should be made as soon as possible too, to manage the situation.
If the dispute cannot be resolved through the HMRC officer, then remember, you are able to consider the Alternative Dispute Resolution mechanism, and taking your appeal to the First-tier Tax Tribunal.
How can Pure Tax help in an ATED compliance check?
Perhaps a voluntary disclosure is required where ATED returns have not been considered or submitted. We recommend that you speak to tax investigation and disclosure specialists. We would assist in evaluating the facts and paperwork, obtaining a market valuation for the property and preparing the ATED returns and explanations. We would ensure the ATED taxes are minimised wherever possible, reducing statutory late payment interest exposure, protecting you from penalties, and best managing HMRC’s ATED team.
Our approach would ensure that HMRC do not open an enquiry or serious investigation into any ATED returns filing errors, which means the HMRC ATED Technical Team is managed informally and there is no need to meet any HMRC officers either.
If you or your client has been contacted by HMRC about making ATED returns where none have been filed to date then we can help steer that process to fix past errors and bring about a speedy conclusion. Importantly, we deliver that all-important trusted ‘buffer’ between our clients and HMRC during the preparing, submission and verification of disclosures, as well as during their in-depth and intrusive investigations.
Get in touch to learn more about how Amit and the Tax Investigations and Disputes team have successfully guided clients through the Worldwide Disclosure Facility, Let Property Campaign disclosures, compliance checks, and COP9 or COP8 investigation processes.
Learn more about how we have helped our clients through their kind feedback here.
HOW CAN PURE TAX HELP?
At Pure Tax our Tax Investigation & Disclosure specialists are industry recognised and have dealt with hundreds of contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the investigation and disclosure processes run smoothly and that your interests are best protected.
