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Lower-value property to become subject to ATED

Posted by Lotty Reeves on 11th July 2014

The value threshold above which residential properties become subject to the Annual Tax on Enveloped Dwellings (ATED) is to be lowered from £2 million to £500,000 over the next two years, under proposals announced in the Chancellor’s 2014 Budget.

ATED is charged on high-value residential properties that are owned by companies or corporate investors rather than belonging directly to an individual. A system of property value bands is used to determine the amount of ATED that is charged. During 2014/15, the amounts charged annually on enveloped dwellings start at £15,400 for those valued at between £2 million and £5 million.

Under changes to the threshold, two new property value bands will be introduced. From 1st April 2015, an annual ATED charge of £7,000 will apply to properties valued at between £1 million and £2 million. Returns for properties falling into this band will be due by 1st October 2015, and payment will be due by 31st October 2015. A second band will come into effect from 1st April 2016 for properties valued at between £500,000 and £1 million, which will be subject to an ATED charge of £3,500. In future years, the amount of ATED due on properties falling in the new bands will be increased annually in line with the previous September’s Consumer Prices Index (CPI), which is already used to calculate ATED for the existing bands.

A relief from ATED may also apply to working farmhouses. For example, if a company-owned farmhouse is used for commercial farming in order to generate a profit, the company may be able to claim relief that will reduce the ATED to zero. The eligibility criteria for this relief includes the requirement that the property is occupied by a farm worker.

To read more about the changes to ATED and relief available, go to:


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