Under ATED rules, if a company or corporate entity owns a UK residential dwelling, valuations on such properties must be updated every five years.
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
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.