ATED explained: What does it mean for you?

ATED works on a banding system, based on the value of a property: currently ranging from £4,600 to £303,450. The charge will increase each year in line with Retail Price Index (RPI).

In addition, non-natural persons are also exposed to a higher rate of Stamp Duty Land Tax (SDLT) on the acquisition of high-value residential properties. This is a flat rate of 17% on the acquisition value for UK purchasers and 19% for non-UK purchasers.

There is also a Capital Gains Tax (CGT) liability on the disposal of UK residential property, regardless of the residency status of the seller. The resulting capital gain is liable to tax at the corporation tax rate, which is currently 25%. Depending on the circumstances of the company, this can be reduced to a lower rate of 19%.   

What valuation do you need?

When considering whether a property falls into the scope of ATED, you need to look at the value on a set date prescribed by the Government, which is every five years on the anniversaries of April 2012. For the upcoming filing in April 2026, this will be based on the valuation as at April 2022 or cost if acquired after this date.

The next revaluation is April 2027, which will be used for ATED purposes from April 2028 onwards.

Is there any relief from the ATED charge?

Residential properties may be held for a genuine commercial reason, such as a rental property and so it seems unfair that companies would need to pay an additional tax as a result.

There are a series of reliefs from ATED, which include:

• Certain property rental  businesses.
• Property development businesses.
• Certain properties open to the public.
• Properties occupied by certain employees.

Where a company qualifies for relief, it is required to file an ATED Relief Declaration Return to claim the applicable relief. This needs to be claimed every year.

When do you need to file an ATED return?

Unlike most other tax returns in the UK, the ATED return (both chargeable and relief) must be filed by 30 April following the start of each ATED period. For the upcoming period from 1 April 2026 to 31 March 2027, an ATED return needs to be filed by 30 April 2026, which is also the normal due date for paying the ATED charge (if required) or claiming relief.

Key changes and points to note

The property rental business relief is extended to cover instances where the property is used as part of the ‘Home for Ukraine’ Scheme. This will apply regardless of whether the property currently qualifies for relief under one of those listed above.

April 2027 is a revaluation year for ATED purposes. This is not just relevant for those already within the scope of ATED, but applicable to any companies who own UK residential property. Whilst a property may have been under the £500,000 threshold previously, this needs to be considered again for April 2028 returns. This could catch out a number of taxpayers if they are not careful.

Get in touch 

For those who fall within the ATED regime, we can assist with the preparation of ATED returns, as well as considering the availability of relief for properties held, which can prove to provide significant savings from the annual charge.

Companies that are not exempt should evaluate whether the benefits of the existing structure outweigh the ATED charge. It may be that it is decided to suffer the charge rather than incur additional costs of ‘de-enveloping’.

There are number of options available. For more information, please get in touch. 

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