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.
ContactsUK private client team
Related linksPrivate client tax