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Article:

ATED – residential property update

18 April 2019

2018/19 was the first year that property holders within the ATED regime will pay the annual charge based on an updated valuation – the value at 1 April 2017. Owners should review whether current property holding structures are still needed.

The Annual tax on enveloped dwellings (ATED) is a tax on certain entities (‘non-natural persons’) holding UK residential property.

It creates an annual tax charge based on the capital value of the property - although reliefs are available. Filing obligations apply and ATED-related gains can arise on the disposal of the property.

Taxable values

The table shows the annual charges from 1 April 2019 based on the value at 1 April 2017 (or date of later purchase).

Property value1

Annual charge2

£0.5m - £1m

 £3,650

£1m - £2m

 £7,400

£2m - £5m

 £24,800

£5m - £10m

 £57,900

£10m - £20m

 £116,100

Over £20m

 £232,350

1 At 1 April 2017 (revalued every five years)
2 From 1 April 2019

Inheritance tax changes for non-doms

Changes from 6 April 2017 mean that UK residential property will now usually fall within the UK IHT net for both UK residents and non-UK residents and no matter how it is owned.

De-enveloping

With the prospect of increased ATED charges and limited IHT advantages in future, ‘de-enveloping’ properties from existing structures may be attractive to reduce the administrative burden. This process may also trigger tax charges, including SDLT. The removal of ATED-related gains and replacement with immoveable property rules should be borne in mind in such extractions.

For help and advice on your property ownership structure please get in touch with Andrew Crossman or Michael Flaherty.