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The Annual Tax on Enveloped Dwellings, ATED for short is one of the newest taxes having been introduced in 2013 and applies where companies hold residential property within a limited company or limited partnership.
With the rise of tax saving opportunities available by holding residential property in this way and rapidly rising house prices it soon became an issue with HMRC missing out on potential tax revenue. Hence on 1 April 2013 the ATED charge was introduced to try and counter this.
Basic Principles of ATED
The current rates payable for 1 April 18 to 31 March 19 are:
Where an individual who has the right to occupy the property is connected with the company which owns the property then this can restrict any of the reliefs outlined in the next section.
Connection with a company can happen in many different ways but the most common one here is where an individual (and any family members) has control of the company. As such care needs to be taken as to who has a right to occupy in order to maximise the reliefs available.
There are a number of reliefs available which reduce the ATED charge on a daily pro-rata basis if on any day in the chargeable period the property falls into one of the following categories.
The relief is claimed when making the original submission of the ATED return or by amending an ATED return already made. If a subsequent relief claim indicates that there has been an overpayment of the ATED charge then any excess will be refunded once the claim has been processed.
Am I affected?
If you can answer yes to all of the following then you are affected and will be required to register for and submit an ATED return before 30 April 2018. This is even if no tax is due because 100% relief is claimed.
1 value at later of date of purchase or 1 April 17
The ATED scheme is fairly complex and the above has only concentrated on its main points. If after reading you feel that you may be affected by the ATED charge and would like any assistance in submitting an ATED return or are simply not sure and want some further assistance then please contact Matthew Harrison (email@example.com) or your usual Cottons contact.
Chartered Accountants and Tax Advisors
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