UK: Valuation when company owns a UK residential dwelling

Valuation when company owns a UK residential dwelling

Under ATED rules, if a company or corporate entity owns a UK residential dwelling, valuations on such properties must be updated every five years.

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Any companies, or certain corporate entities, that own a UK residential dwelling (enveloped dwelling) valued over £500,000 fall within the Annual Tax on Enveloped Dwellings (ATED) regime. An ATED return should be submitted to HMRC annually whether tax is payable or relief is claimed. To comply with the rules, enveloped dwellings must be revalued every five years - and a new valuation date occurred on 1 April 2017. These required revaluations will have effect for the five chargeable periods beginning on 1 April 2018. This applies to all properties owned at that date, even if acquired within the last five years.

Enveloped dwellings not in the regime (because they were worth less than £500,000 before the last valuation date) may enter the ATED regime next year. Some dwellings in the regime near the threshold could be tipped into the next tax band resulting in a higher tax charge for the next five years.  As well as the five-yearly revaluation, certain other events can also cause dwellings to be revalued: e.g. acquisitions and practical completion of new builds. For the purposes of ATED, dwellings include buildings that are in the course of construction or adaptation for residential use.

Companies may not have filed an ATED return to date because none of the dwellings they own were valued over £500,000 at the last valuation date. For dwellings owned before 1 April 2017, companies may wish to consider revaluing dwellings before the filing date for the next ATED year (30 April 2018) where the value of the dwelling at 1 April 2017 might cause the dwelling to enter the regime or a higher tax band.

The chargeable amounts for 1 April 2017 to 31 March 2018 are as follows:

Property value Annual charge*
More than £500,000 but not more than £1m £3,500
More than £1m but not more than £2m £7,050
More than £2m but not more than £5m £23,550
More than £5m but not more than £10m £54,950
More than £10m but not more than £20m £110,100
More than £20m £220,350

*Charges increase in line with inflation.

 

For more information, contact a tax professional with the KPMG member firm in the UK: 

Sean Randall | Sean Randall@KPMG.co.uk

Preema Patel | Preema Patel@KPMG.co.uk

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