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Where the ATED bites

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20th Apr 2015
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Were you amazed by the range of properties across that UK that £1m can buy, as illustrated in the Channel 4 programme recently?

The pokey places within that price range in London should ring alarm bells for clients who hold residential properties within a corporate wrapper - including partnerships with corporate members.

As where such properties are worth over £1m they are potentially subject to the Annual Tax on Enveloped Dwellings (ATED), and an ATED return will be due.

Although the new ATED band of over £1m but no more than £2m came into effect on 1 April 2015, the key valuation date for those properties is 1 April 2012.

To determine whether a property is now within ATED you need to look back to its value on 1 April 2012, unless the property was acquired by the current owner since that date, when the value at acquisition is the relevant one for ATED. All properties subject to ATED must be revalued every five years, so the next valuation date will be 1 April 2017.

If you believe the property value is close to the boundary of one of ATED bands (within 10%) you can ask HMRC for a pre-return ATED banding check. This won’t give you a precise value for the property but it will tell you which ATED band it falls into.  

If the property is within the ATED charging bands, you need to submit an ATED return, as this is required even if one of the many ATED reliefs applies, as outlined by Gabelle. The good news is; if the property falls into the ATED regime for the first time this year because of the new £1m to £2m band, the owner has until 1 October 2015 to submit the ATED return, (FA 2014, s 109), and until 31 October 2015 to pay any ATED due.

For all other properties the ATED return and payment are both due by 30 April within the chargeable year, so for 2015/16 the tax and return must reach HMRC by midnight on 30 April 2015. If the property is acquired within the year (beginning 1 April) the ATED return is due within 90 days of the acquisition.

If the ATED return is late, penalties for late filing apply just like for self-assessment tax returns.

This means a fixed £100 penalty when the return is one day late, then daily £10 penalties, and the greater of: 5% of the tax due or £300 after six months. There are also separate penalties for late payment of ATED and for errors in ATED returns.

For the first two years of ATED (2013/14 and 2014/15) an ATED return had to be submitted for each property, but FA 2015 has introduced an ATED relief declaration return that can cover a portfolio of properties. This return allows the owner to claim relief from ATED on the grounds of being:

  • Property rental business
  • Property development business;
  • Property trader
  • Financial institution which has acquired the dwelling as part of a debt

Generally a company need only claim one of those reliefs, which is fortunate, as the ATED relief declaration return may only be used for one ATED relief at a time.

If the company holds has a number of properties which qualify for different reliefs due to the use the property is put, such as being:

  • Open to the public for at least 28 days a year
  • Occupied by qualifying employees or partners
  • A working farmhouse
  • Social housing

it must complete a separate ATED relief declaration return for each type of relief.

The relief declaration return is supposed to apply for chargeable periods beginning on and after 1 April 2015, but there is no sign of this new form being made available on the GOV.UK website. However, there is an extended period to submit the relief declaration return; by 1 October within the year, so by 1 October 2015 for 2015/16.

Rebecca Cave is the author of Tax Rates and Tables 2015/16 (Pre-Election edition to be published this month by Bloomsbury Professional.

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By dennywren1
23rd Apr 2015 12:07

ATED Increase irritation

 

I was a bit concerned about the increase in ATED rates having read the budget 2015 it did say the increase would be 50% above inflation.

Logic would say if inflation was 3% then 4.5%.

Lovely shock to see it meant 50% increase. I now have a very unhappy client.

Was I the only one not to spot it?

 

 

 

 

 

 

 

 

 

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