ATED – upcoming action required
Your corporate client is within the scope of ATED if it holds or acquires residential property with a market value or acquisition cost of over £500,000
The valuation date is set by legislation, with fixed revaluation dates for all properties every five years regardless of the date the property was acquired.
The next mandatory revaluation for ATED purposes is 1 April 2022. This valuation will be effective for ATED periods ending 31 March 2024 (i.e. used for submissions due to be made in April 2023).
If the estimated value of a dwelling is within 10% of an ATED threshold a pre-return banding check (PRBC) can be requested from HMRC. This will confirm HMRC’s view as to whether ATED applies, and if so at what rate. Requests for PRBCs should be submitted as far in advance of the return due date as possible to avoid late filing. More information and the form to request a PRBC can be found here.
Filing and payment
Where a property is within the scope of ATED a return needs to be submitted for each annual period together with payment of any ATED charge.
In contrast to most other taxes, ATED returns need to be submitted at the beginning of each annual period and not following the end of the period. Returns must be filed for a period, and any ATED charges paid:
- By 30 April if the property was held on 1 April.
- Within 30 days of acquisition if a property within the scope of ATED is acquired after 1 April.
- For new build properties, within 90 days of the earliest of first occupation or first becoming a dwelling for Council Tax purposes.
However, ATED returns cannot be submitted before the start of the period (i.e. before 1 April).
This means that, for example, returns for the period ending 31 March 2023 have to be submitted and payments made between 1 and 30 April 2022 if the property was held on 1 April 2022.
Penalties and interest can be charged if a return or payment is late or an incorrect return is submitted.
Where a relief applies to reduce the ATED charge in any period to nil, a full ATED return is not required. Instead an RDR must be filed within the same deadlines set out above.
Thanks for this P.
Definitely something that all managers need to be aware of.
(and yes that includes accountants ; ) )
All you need to remember is resi property + value/cost over £500k = talk to the tax team.
That formula applies to revalued property or newly acquired property. So it may be that your client has held the property for some time before being caught by the rules, or your client may be caught by these on initial acquisition of the property.
Penalties / repercussions of not identifying this issue for your client are painful. So remember that simple formula and you will have happy clients and an easier life 🙂
If you have more complex queries re ATED then probably worth a chat with
Graeme Lillywhite or myself in the first instance for further advice.