Thursday, 10 April 2014

ATED goes large

ATED (the UK’s Annual Tax on Enveloped Dwellings) is one of the newest taxes to hit the statute book but it became clear in this year’s Budget that, as taxes go, it is destined for even greater things in 2015 and beyond.

ATED is an annual tax, levied on non natural persons (such as companies) owning UK residential property.  Assuming one of the ATED reliefs is not available, the amount of ATED payable per annum depends upon the value of the property at the last valuation point (currently 1 April 2012) and the annual chargeable amount (ACA) for the particular ATED tax year, as the ACAs increase with the UK’s Consumer Price Index each year. 

Currently there are four ATED bands.  The bands and the ACAs for ATED tax year 2014/2015 are shown below (the ACAs for ATED tax year 2013/2014 are shown in italics, by way of comparison):

£15,400 (£15,000)
>£2,000,000 but not more than £5,000,000
£35,900 (£35,000)
>£5,000,000 but not more than £10,000,000
£71,850 (£70,000)
>£10,000,000 but not more than £20,000,000
£143,750 (£140,000)

Budget 2014 revealed that the Government plans to extend the reach of ATED to properties of a more modest value.
From 1 April 2015, properties worth more than £1,000,000 but not more than £2,000,000 will be subject to ATED and the ACA due will be £7,000.
In ATED tax year 2016/2017 this will be extended further, so that properties worth more than £500,000 but not more than £1,000,000 will be subject to ATED and have an ACA of £3,500.
For these newly affected properties, it seems that the valuation point for the purposes of ATED will remain 1 April 2012 for properties owned at that date, or at acquisition date if later.  The next valuation date will be 1 April 2017.  Transitional arrangements for filing and payment dates will apply during their first ATED tax year.
The additional significance of a property becoming subject to ATED is that it will also become subject to ATED Capital Gains Tax on disposal, although gains accruing during the period before the property was subject to ATED will not be subject to ATED-CGT.
So, may I be the first and perhaps only person to wish you Happy New ATED tax year.  Remember that for properties subject to ATED on 1 April 2014, the tax return filing date and tax payment date have moved to 30 April 2014.