Now that we are in March it is time to start thinking about whether your company needs to prepare an ATED return this year.
Is it relevant to me?
ATED returns are required to be filed where a company owns a residential property with a value (at the Valuation Date) of more than £500,000. The property could be held in stock or as a fixed asset.
What is the Valuation Date? The Valuation Date for the current year’s return is 1 April 2022, which will be frustrating for some, just as property prices are starting to drop.
If the property was acquired after 1 April 2022, then the acquisition date is used as the Valuation Date.
ATED returns must be submitted to HMRC between 1 April 2023 and 30 April 2023 and cover the period 1 April 2023 to 31 March 2024.
What if I don’t send in an ATED return?
HMRC will raise a penalty and interest (where there is a liability) if:
- you don’t send a return or payment
- you don’t send a late return or payment or
- the return is incorrect or has a mistake
HMRC will raise penalties for failing to file a return (even if a relief can be claimed).
- Fixed late filing penalty – £100
- Further penalty of £10 per day for each day the return is late up to 90 days
- If the failure continues after the end of 6 months the penalty is the higher of 5% of any tax due or £300
Therefore, for a nil ATED return that is more than 6 months late, the penalty would be £1,300.
It is therefore important to ensure that you start thinking about ATED now.
What do I need to do?
If your company does own a residential property that was valued at more than £500,000 as at 1 April 2022, an ATED return will need to be submitted. However, there may not be a liability to pay if any of the following reliefs apply:
The property is:
- let to a third party on a commercial basis and is not, at any time, occupied by anyone connected with the owner
- open to the public for at least 28 days a year
- being developed for resale by a property developer
- owned by a property trader as stock with the sole purpose of resale
- being used by a trading business to provide living accommodation to certain qualifying employees or
- owned by a registered provider of social housing or a qualifying housing co-operative
HMRC also needs to be notified during the year if circumstances with regards a qualifying property change. For example, if the company:
- disposes of a property
- changed from qualifying for a relief to needing to pay a liability or
- changed relief codes for a property
If no reliefs apply, an ATED tax charge is payable by 30 April 2023. The annual charge is based on set ‘bands’ and the charges have increased since last year.
Chargeable amount for 1 April 2023 to 31 March 2024:
|Property value||Annual charge|
|More than £500,000 to £1m||£4,150|
|More than £1m to £2m||£8,450|
|More than £2m to £5m||£28,650|
|More than £5m to £10m||£67,050|
|More than £10m to £20m||£134,550|
|More than £20m||£269,450|
If you would like some assistance with preparing your ATED return of have any queries about whether the property will qualify for a relief, please get in touch with us through the form below.
Please note – The ATED rules can be complex and the above just covers the change in the relevant date for valuation purposes which applies to all relevant properties held at 1 April 2022. Revaluations of properties may also be required in other circumstances and different deadlines apply to properties falling into the regime but not held at 1 April.