More properties brought within the annual tax on enveloped dwellings

The Chancellor announced in the recent Budget that the annual tax on enveloped dwellings (ATED), which currently applies to residential properties valued at more than £2 million, would be extended in two stages to properties valued at more than £500,000.

From 1 April 2015 a charge of £7,000 will apply to properties with a value from £1 million to £2 million; and from 1 April 2016 a charge of £3,500 will apply to properties between £500,000 and £1 million.

An ATED period begins on 1 April each year. The ATED return and payment are normally due by the following 30 April; i.e. within the period. For the period beginning on 1 April 2015 returns for properties within the new £7,000 charge will, exceptionally, be due on 1 October 2015 and the payment on 31 October 2015. This relaxation will not apply for the new £3,500 charge in 2016.

There are corresponding changes to the capital gains tax charge that applies at a fixed rate of 28% on disposals by companies (including those resident overseas) of UK properties within the ATED charge. In addition, the threshold for the 15% stamp duty land tax (SDLT) rate that applies to purchases of residential properties by companies was reduced from £2 million to £500,000 from 20 March 2014.

For further details, see our updated factsheets on the ATED return and on the ATED-related capital gains tax charge.

Contacts

UK private client team

Related links

Private client tax