Yet another financial blow to landlords – ATED?

by Readers Question

8:16 AM, 8th March 2017
About 2 years ago

Yet another financial blow to landlords – ATED?

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Yet another financial blow to landlords – ATED?

I may have missed this, but has there doesn’t seem to have been much mention on the forum of the new Annual Tax on Enveloped Dwellings which is coming in in April? HMRC

Seems to me that this will more than wipe out any tax savings made by incorporating for landlords who are investing in areas where properties have high values such as London and surely it can only be a matter of time before the Government roll it over to private landlords too.

Barbara

Editors Note for reference:

Please see .Gov >> https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics

Reliefs you can claim

You may be able to claim relief for your property if it is:

  • let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
  • open to the public for at least 28 days a year
  • being developed for resale by a property developer
  • owned by a property trader as the stock of the business for the sole purpose of resale
  • repossessed by a financial institution as a result of its business of lending money
  • being used by a trading business to provide living accommodation to certain qualifying employees
  • a farmhouse occupied by a farm worker or a former long-serving farm worker
  • owned by a registered provider of social housing

Find more on these reliefs and the criteria you need to meet in sections 30 to 41 of the ATED technical guidance.

Overview

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.

You’ll need to complete an ATED return if your property:

  • is a dwelling
  • is in the UK
  • was valued at more than:
    • £2 million on 1 April 2012, or at acquisition if later, for returns from 2013 to 2014 onwards
    • £1 million on 1 April 2012, or at acquisition if later, for returns from 2015 to 2016 onwards
    • £500,000 on 1 April 2012, or at acquisition if later, for returns from 2016 to 2017 onwards
  • is owned completely or partly by a:
    • company
    • partnership where one of the partners is a company
    • ­collective investment scheme – for example a unit trust or an open ended investment vehicle

A new ATED band came into effect on 1 April 2016 for properties valued between £500,000 and £1 million. The normal filing and payment date for properties falling into this new band is 30 April 2016.

ATED returns must only be submitted on or after 1 April in any chargeable period.

There are reliefs and exemptions from the tax, which may mean you don’t have to pay.

Meaning of ‘dwelling’

Your property will be a dwelling if all or part of it is used, or could be used as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.

Find out about valuing different types of properties for example mixed use, more than one dwelling and multiple interest properties.

Some properties aren’t classed as dwellings. These include:

  • hotels
  • guest houses
  • boarding school accommodation
  • hospitals
  • student halls of residence
  • military accommodation
  • care homes
  • prisons

Section 19 of the ATED technical guidance explains more about the meaning of ‘dwelling’.

Value your property

To work out what you need to pay you’ll need to value your property.

In some circumstances you can also ask HM Revenue and Customs (HMRC) for a Pre-Return Banding Check (PRBC).

What you need to pay

The amount you’ll need to pay is worked out using a banding system based on the value of your property.

Chargeable amounts for 1 April 2017 to 31 March 2018

Property value Annual charge
More than £500,000 but not more than £1 million £3,500
More than £1 million but not more than £2 million £7,050
More than £2 million but not more than £5 million £23,550
More than £5 million but not more than £10 million £54,950
More than £10 million but not more than £20 million £110,100
More than £20 million £220,350

Chargeable amounts for 1 April 2016 to 31 March 2017

Property value Annual charge
More than £500,000 but not more than £1 million £3,500
More than £1 million but not more than £2 million £7,000
More than £2 million but not more than £5 million £23,350
More than £5 million but not more than £10 million £54,450
More than £10 million but not more than £20 million £109,050
More than £20 million £218,200


Comments

Martin Wardle

8:31 AM, 8th March 2017
About 2 years ago

It hasnt been mentioned as it does not apply to landlords. One of the first exemptions is for those letting property on a commercial basis (i.e. fair market rent to a third party that is not connected to them)...

Neil Patterson

8:36 AM, 8th March 2017
About 2 years ago

Reply to the comment left by "Martin Wardle" at "08/03/2017 - 08:31":

Reliefs you can claim

You may be able to claim relief for your property if it is:

let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
open to the public for at least 28 days a year
being developed for resale by a property developer
owned by a property trader as the stock of the business for the sole purpose of resale
repossessed by a financial institution as a result of its business of lending money
being used by a trading business to provide living accommodation to certain qualifying employees
a farmhouse occupied by a farm worker or a former long-serving farm worker
owned by a registered provider of social housing

Find more on these reliefs and the criteria you need to meet in sections 30 to 41 of the ATED technical guidance.

Charles Mackay

13:44 PM, 8th March 2017
About 2 years ago

Reply to the comment left by "Martin Wardle" at "08/03/2017 - 08:31":

Martin,

I believe the term "commercial landlord" refers to landlords letting out commercial properties (offices and such) as opposed to residential properties. So, if you let out residential properties, even at market rates (LOL), then you are not exempt.

Chris Harris

14:48 PM, 8th March 2017
About 2 years ago

Reply to the comment left by "Charles Mackay" at "08/03/2017 - 13:44":

Charles

The exemption quoted above says "let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner"

That is a property let on a commercial basis, not a commercial property.

Martin Wardle

23:11 PM, 8th March 2017
About 2 years ago

Reply to the comment left by "Charles Mackay" at "08/03/2017 - 13:44":

Chris is right. Doing something in a commercial basis bears no relevance to commercial property...


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