ATED net will be cast wider from 1 April

Mon 08 Feb 2016

As the tax net is cast ever wider to increase revenues without “increasing taxes”, the annual tax on enveloped dwellings (ATED) is to be extended to properties valued over £500k and up to £1m from 1 April 2016, with an annual charge of £3,500.  For this purpose, the value of the property is that at 1 April 2012, or on acquisition, if later.

30 April deadline applies to ALL ATED returns

When ATED was introduced in 2013/14 and when the £1-2m value band was introduced in 2015 returns of ATED on properties newly coming into ATED were not required until 31 October of the year concerned.

For 2016/17 there is no such relaxation, so any client who needs to consider an ATED return for 2016/17 needs to be aware that they will only have until 30 April 2016 to prepare and submit their return or relief claim and pay any tax due.

Future updates

The draft Finance Bill clauses for 2016 include new ATED reliefs from 1 April for:

·         dwellings to be made available for the accommodation of employees/partners for the purposes of a property rental business (previously the relief only applied for dwellings made available for the purposes of a trade);

·         a flat to be made available for the accommodation of a caretaker of a building who is employed by a tenant-run management company and there are at least two other flats contained in the building whose tenants are members of the management company and the management company owns or will own the freehold of the premises; and

·         dwellings acquired under a regulated home reversion plan by an authorised plan provider.

The rules are not otherwise being altered significantly but the widening of their scope will bring a greater number of properties owned through corporate-based structures into the scope of the ATED rules, if only to claim exemption.