Annual Tax on Enveloped Dwellings (ATED)

Tue 01 Apr 2014

ATED amounts 2014/15

The value bands for ATED will remain the same in 2014/15 but the amounts of ATED payable on each band are increased as follows:

New ATED bands in 2015/16 and 2016/17

From 1 April 2015 a new band will come into effect for properties with a value over £1million and up to £2million. The annual charge on those properties will be £7,000.

From 1 April 2016 a further new band will come into effect for properties with a value over £500k and up to £1million. The annual charge on those properties will be £3,500.

A transitional rule will apply to the £1 million to £2 million band, requiring returns to be filed on 1 October 2015 and payment by 31 October 2015.

If no further changes are made it is likely that a greater number of nil returns will be required than returns showing an actual liability. The Government is understood to be considering options for mitigating the compliance burden in relation to properties to which reliefs apply.

ATED-related CGT extension in 2015/16 and 2016/17

ATED-related CGT applies to all properties subject to ATED and will continue to do so when the lower bands come into effect but the starting points for calculating the CGT will be the same as for the extended ATED, i.e.:

• 1 April 2015 for properties between £1m and £2m; and
• 1 April 2016 for properties between £500k and £1m.

Therefore the charge will only relate to that part of the gain which accrues from the date the property comes within the scope of ATED, with the balance of the gain continuing to be taxed as present.