Within this post we reflect on points for companies that are within ATED to consider in 2022, including the impact of the new 1 April 2022 ATED valuation date and the upcoming Overseas Entities Register.
The Annual Tax on Enveloped Dwellings (ATED) applies each year to all companies holding UK residential property valued at over £500,000. The ATED year starts on 1 April and ends on 31 March.
Companies must file an ATED return in advance by 30 April for each ATED year where UK residential property is held, even where one of the ATED reliefs applies.
1 April 2022 Valuation Date
Annual valuations are not required for ATED reporting. Instead, “valuation dates” are used to determine the chargeable amount due on a property.
The default position for ATED is that 1 April 2012 and each 1 April falling five years after 1 April 2012 (i.e. 1 April 2017, 1 April 2022, 1 April 2027 etc.) are the valuation dates. These new 1 April valuation dates apply for the following five ATED years.
Therefore, where the default position applies, companies will need to obtain a property valuation as at 1 April 2022 to use for the ATED year starting on 1 April 2023. Taxpayers will need to file the ATED return with that valuation by 30 April 2023.
Other valuation dates can apply on the date of acquisition, as well as where a substantial acquisition of a further property interest or disposal of part of a dwelling (more than £40,000) has occurred. Please refer to the following article on our website for more information on what counts as a valuation date for ATED purposes - https://www.burges-salmon.com/news-and-insight/legal-updates/ated-valuation-dates.
Taxpayers must decide whether to prepare a valuation themselves or instruct a professional (e.g. a surveyor or estate agent). A new valuation may not be required where a relief has applied (and is expected to continue to apply) throughout the entire ownership period.
It would usually be sensible to obtain an updated valuation where:
- significant work has been undertaken on the property;
- the current ATED value is close to a relevant ATED band; or
- the property was below the £500,000 ATED threshold on 1 April 2017.
We always advise clients to obtain an independent professional valuation where a property is only just below an ATED band.
Where a property valuation is within 10% of an ATED band, it is possible to submit a pre-return banding check to HMRC, requesting confirmation on whether HMRC agrees that the property falls within the relevant band. A check in relation to the 1 April 2022 value should be submitted well before April 2023 to give HMRC time to respond and for the return to be submitted. However, in our experience these pre-return banding checks are rarely requested.
Homes for Ukraine Scheme
The government announced on 31 March that legislation will be introduced to ensure that properties used as accommodation for refugees under the Homes for Ukraine Scheme will be able to claim relief from ATED from 1 April 2022.
The Overseas Entities Register
Although not directly connected with ATED, overseas companies holding UK property should also be aware that they will need to comply with the overseas entities register requirements when the register goes live later this year.
More information on the overseas entities register is contained in our recent website article - https://www.burges-salmon.com/news-and-insight/legal-updates/private-wealth/the-overseas-entities-register-for-uk-property-what-you-should-know.
Overview You need to know the value of your property to find out if it falls within the scope of Annual Tax on Enveloped Dwellings (ATED). When you know the value of your property you can work out what property value band it falls into. This will tell you whether you need to pay ATED and how much you need to pay each year.