If you’re a UK Ltd company that owns UK residential property valued at more than £500,000 then you’re potentially liable to ATED. ATED is a progressive tax whose rates can change each year. It was introduced to discourage the practice of holding high-value residential properties by corporations solely for tax purposes. Historically it applied to properties whose value was above £2m in 2013, before dropping to £1m in 2015, and reaching its current £500k level in 2016.
The ATED follows a banding scale, with the table below showing the annual charges for the 2023-24 tax year. The annual charges are reviewed each year with most of the below going up at least 9% in comparison to 2022-23.
Property value | Annual charge applicable 1 April 2023 to 31 March 2024 |
£500,001 - £1m | £4,150 |
£1m - £2m | £8,450 |
£2m - £5m | £28,650 |
£5m - £10m | £67,050 |
£10m - £20m | £134,550 |
More than £20m | £269,450 |
Note that it’s the value of each individual property, rather than a collective portfolio e.g. if one Ltd company owns three £400k residential houses then it’s not liable to ATED. There are some exemptions that can be utilised to lower your ATED, but broadly speaking if it’s a residential dwelling that’s privately rented by a company, not a person, you will be liable to ATED if the property value is greater than £500k.
Properties with multiple dwellings that are connected, with internal access between them, would still count as a single dwelling, such as Houses of Multiple Occupancy (HMOs).
To manage your ATED responsibilities, an ATED return and payment of any tax owed is due within 30 days of a property purchase. For existing properties, the ongoing filing and tax payments are due by April 30th each year, for the valuation period of the 12 months prior (1st April – 30th March).
The property must also be revalued in GBP every five years in line with current legislation. This can be done by yourself or through professional valuers but must be on an open-market basis. If you’re doing the valuation yourself, ensure you retain sufficient evidence to support your valuation, such as documenting your online estate agent research. If you use a professional and incur an expense, remember to claim this as corporation tax deductible as part of the properties P&L.
This article is designed as a brief introduction to the topic and everyone’s situation is always unique. If you have any questions or would like some advice on your own situation, please submit a message on the contact page and I will be happy to help.
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