ATED Returns
ATED Returns - Annual Tax on Enveloped Dwellings for UK Property Companies
If your UK company, partnership with a corporate partner, or collective investment scheme owns a residential property worth more than £500,000, you may be liable for the Annual Tax on Enveloped Dwellings (ATED). ATED is a specialist tax obligation that many property companies are unaware of, until HMRC pursues them for unpaid charges, interest, and penalties. See HMRC’s official guidance on the Annual Tax on Enveloped Dwellings.
At Merit Accountants, our property tax specialists manage the full ATED process: assessing whether your property falls within the charge, identifying available relief claims, preparing and filing your ATED return by the 30 April annual deadline, and advising on the Capital Gains Tax implications when an enveloped property is eventually disposed of.
Who Does ATED Apply To?
The Annual Tax on Enveloped Dwellings (ATED) applies to companies and other “non-natural persons” that hold UK residential property worth more than £500,000. You fall within the rules if a dwelling is owned, in whole or in part, by:
- A Company
- A Partnership With At Least One Corporate Member; Or
- A Collective Investment Scheme, such as a Unit Trust Or an Open-Ended Investment Company.
Property owned directly by individuals is outside ATED. A “dwelling” is anything used, or capable of being used, as a residence, together with its gardens and grounds; hotels, guest houses, care homes, hospitals, student halls of residence and similar are excluded.
If you are within scope, you must file an ATED return for each chargeable period, even when no tax is due because a relief applies (for example, a property let to unconnected tenants on a commercial basis). Reliefs are never given automatically; they have to be claimed on the return, and the penalties for filing late mount up year on year.
The charge depends on the property’s value. For the 2026/27 chargeable period (1 April 2026 to 31 March 2027) the annual charges are:
Property value | Annual charge (2026/27) |
More than £500,000 up to £1 million | £4,600 |
More than £1 million up to £2 million | £9,450 |
More than £2 million up to £5 million | £32,200 |
More than £5 million up to £10 million | £75,450 |
More than £10 million up to £20 million | £151,450 |
More than £20 million | £303,450 |
Revaluing Your Property Every Five Years
Your property must be revalued for ATED every five years. The current valuation cycle runs from the 2023/24 chargeable period and is based on the property’s open-market value as at 1 April 2022 (or its value on the date you acquired it, if that was after 1 April 2022). That 1 April 2022 valuation applies for the five chargeable periods from 2023/24 to 2027/28. The next revaluation date is 1 April 2027, taking effect from the 2028/29 period. Because an increase in value can move a property into a higher band, or bring it within ATED for the first time, it pays to review your valuation before the deadline rather than after.
ATED Reliefs - Significantly Reducing or Eliminating the Charge
Many companies that own residential property are entitled to full relief from the ATED charge, but only if they file the correct relief claim return by the 30 April deadline. Missing this deadline means the relief is lost for that year, even if the company would have fully qualified. The most commonly applicable ATED reliefs include:
✓ Property Rental Business Relief
Companies that let their residential property on a commercial basis to unconnected third parties qualify for full relief from ATED. This is the most widely applicable relief and covers the majority of property investment companies.
✓ Property Development Relief
Companies carrying out property development, purchasing properties to develop and sell, qualify for relief during the development period.
✓ Farmhouse Relief
Farmhouses that form part of a working farm may qualify for relief.
✓ Charitable Relief and Social Housing Relief
Properties used for qualifying charitable purposes or social housing are exempt.