Is your property company subject to ATED?

Published by Dipesh Galaiya on 28 March 2024

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The start of Spring beckons the directors of property companies to start thinking actively about their Annual Tax on Enveloped Dwellings (“ATED”) obligations.

The window of opportunity to file the 2024-25 ATED returns (or relief returns) opens on 1 April 2024 and the ATED charge must be paid (and the return submitted) by no later than 30 April 2024.

Unlike other taxes ATED looks ahead for the period from 1 April to 31 March.  It is an annual charge which applies to non-natural persons (e.g. a company, a partnership with a corporate partner, or a collective investment scheme) who hold UK residential property with a value in excess of £500,000.  The most recent revaluation date being as 1 April 2022 (or the date of acquisition if the property was acquired if later).  Both UK and offshore structures are subject to these rules.

Where ATED applies, then the following tax charge is payable for 2024-25:

Valuation Banding 2024/25 ATED Charge
£500,001 – £1,000,000 £4,400
£1,000,001 – £2,000,000 £9,000
£2,000,001 – £5,000,000 £30,550
£5,000,001 – £10,000,000 £71,500
£10,000,001 – £20,000,000 £143,550
£20,000,001 and over £287,500

For further detail on ATED requirements and reliefs, please click here.

As a reminder, offshore companies also need comply with the requirements of the Overseas Entities Register. Although the deadline to first register with Companies House was 31 January 2023, the overseas entity must keep this register updated annually, and a failure to comply with the updating requirement will render the initial registration as void and ineffective until it has delivered the required updated information to Companies House.

Where you own UK property in an offshore structure it is important to understand your UK reporting obligations.  This includes UK corporation tax on its rental profits, ATED filing, rebasing for capital gains purposes and changes to rules for Inheritance Tax.  It is therefore important to ensure that you seek professional advice.

We are seeing several cases where clients want to bring these structures ‘onshore’ or perhaps to consider ‘de-enveloping’ which can enable them to save on the running costs of these structures.

There are complex tax issues to consider, and this requires careful thought and planning. Remember – no one size fits all. Please contact us today for further advice.

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