While changes affecting private residential landlords have made headlines in recent years, the ATED regime is a significant cost for companies, LLPs and partnerships that own a UK residential property valued at more than £500,000.
The ATED regime requires you to file a return and pay tax due for the 2017-18 tax year by 30 April 2017, if you meet these criteria. Failure to file a return or pay this tax on time will result in significant penalties.
HM Revenue & Customs (HMRC) lists the following annual charges for properties within the ATED regime:
Property value Annual charge
More than £500,000 but not more than £1 million £3,500
More than £1 million but not more than £2 million £7,050
More than £2 million but not more than £5 million £23,550
More than £5 million but not more than £10 million £54,950
More than £10 million but not more than £20 million £110,100
More than £20 million £220,350
A further consideration is that the ATED regime from 1 April 2018 will be based on the value of the property at 1 April 2017 – until now, the charges have been based on the value of the property at 1 April 2012.
This means that you may, from next year, be subject to ATED if you have not been until now. It also means that you may move up a band – something which could cost as much as £110,250 based on the 2017/18 annual charges.
It is permitted to provide your own valuation or you can use a professional valuation for the purposes of ATED.
If carrying out your own valuation, however, it is important to consider that there are substantial penalties which apply in cases where tax has been underpaid as a result of undervaluing a property.