The ATED regime came into force from 1 April 2013 affecting UK and Non-UK non-natural persons (defined as companies, partnerships with a corporate member or collective investment schemes) that hold an interest in certain UK residential properties.
When the legislation was first introduced it only applied to residential properties valued at more than £2 million on 1 April 2012 (or on acquisition if later).
That valuation entry threshold has subsequently been lowered first to £1 million and now down to £500,000, resulting in far more properties being reportable.
The implications of falling within the ATED regime are that an annual tax charge will arise unless one of the reliefs applies. Typically, a property valued between £500,000 and £1 million will attract a £3,500 annual tax charge and this scales upwards depending on the value of the property. More complex rules apply in the year of acquisition of a relevant property.
The ATED legislation is an annual compliance regime that must be adhered to and non-compliance can result in penalties for non/late filing and non/late payment of tax due. The ATED chargeable period runs from 1 April to 31 March and an ATED return must be filed by 30 April in the year of charge.
However, there are reliefs available that can reduce the ATED liability to nil and can be claimed by completing the Relief Declaration Return (RDR), with the same submission deadline as above. A single RDR can be made for each relief applicable.
The reliefs available are:-
- property development businesses
- property rental businesses
- property trading businesses
- employee accommodation
- occupation as a farmhouse
- social housing
- dwellings open to the public