ATED – annual charge increased for all but lowest band

Wed 08 Mar 2017

Although not mentioned in the Chancellors Speech, the Annual Tax on Enveloped Dwellings (‘ATED’) charges that will apply for 2017/18 have been increased slightly from those for 2016/17 for all bands except the lowest band.

Somewhat surprisingly, for a tax which was introduced to deter residential property from being held in a corporate or other wrapper, the increases, varying from 0.71% to 0.98% are below the rate of inflation and suggest that the Government may now view ATED as a revenue earner rather than a deterrent measure.

The table below shows the rates for 2016/17 and the proposed rates for 2017/18:

Companies and other so-called non natural persons (collective investment schemes and partnerships with at least one corporate partner) pay an ATED charge on each dwelling held that has a value of more than £500,000 unless relief is available.

Relief from the ATED charge is available, subject to meeting the relevant conditions, where a dwelling is held for the purposes of a property development, property rental or property trading business; or for dwellings occupied by certain employees, open to the public or held for regulated home reversion plans; or for farmhouses and dwellings held for charitable purposes.

By James Summers