Annual Tax on Enveloped Dwellings (ATED) – April 2017 new valuations

Posted on 09/03/2017 at 10:42

Some of our company clients with properties in the UK are required to submit ATED returns by 30 April to cover a tax year. For example, for 2017/18, the return will be due by 30 April 2017.

The ATED was introduced in April 2012 and valuations were done then on properties held on that date to ensure that a) ATED did apply because the properties were valued above the prescribed threshold and b) the correct tax charge was applied and paid.

The valuations of these properties will need to be done after every 5 years; therefore we would like to remind clients to carry out these valuations in April 2017 to ensure that where the properties are valued above the £500,000 threshold, then a return is prepared or the correct banding is applied.

Some of our clients benefit from the Property rental businesses relief which gives relief from ATED for property rental businesses therefore no tax is paid although a nil return will need to be submitted by 30 April.

Please note that other valuation dates between these fixed 5 year valuation dates can occur, for example if you increase the value of your dwelling through a land transaction (for example you acquire more land or extend a lease).

The following example will illustrate the valuation requirements:

Property A was bought on 1 January 2010 (i.e. pre 1 April 2012). The property would have been valued on 1 April 2012 and that value is used to determine if ATED applies and/or the applicable tax.

Property B was bought on 1 January 2013 (i.e. post 1 April 2012). The acquisition cost will be used to determine if the ATED applies.

Both property A and B will need to be revalued on 1 April 2017 so that this value is used for the 2018/19 Return which will be due by 30 April 2018.