What is a Dwelling for ATED purposes?

Annual Tax on Enveloped Dwellings (#ATED) is an annual tax payable when a UK residential property that is valued at more than £500,000 is owned by a company or other non-natural person such as a partnership. 

 

The keyword here is ‘dwelling’. The dwelling must be valued over £500,000 (in a later post we’ll be talking about the revaluation dates of property). In most cases, this means that if the property is valued over £500,000, a return is needed, but this is not always the case. A property is a ‘dwelling if all or part of it is used, or could be used, as a residence, for example a house or a flat.’ This means that it is a self-contained unit. 

 

An example is if you bought a block of flats for £1,000,000 there were 4 flats (dwellings) in the building then this will not come under ATED as each dwelling will only be worth £250,000. However, if you purchased an HMO property with 5 rooms for £1,000,000 then this would come under ATED as the whole building is considered as 1 dwelling as each room is not self-contained. 

 

Once you establish that you have a dwelling that requires an ATED return you can then take steps to file it on time. The filing responsibilities lies solely with the owner (and the filing deadlines will be covered in the next two blogs/posts) to be compliant and HMRC has no obligation to issue a notice telling you to file. 

 

If you’re a client of Property Tax Advice, we can have an overview conversation about this, or we can be instructed to handle this for you. Contact jenny@property-tax-advice.co.uk 

 

#ATED #dwelling #HMO