Annual Tax on Enveloped Dwellings (ATED) – What You Need to Know
ATED applies to companies and other ‘non-natural persons’ that own UK residential properties valued at over £500,000. The tax is based on the property’s value unless an available relief is claimed.
Who Can Claim Relief?
One key relief applies to properties that are let to third parties on a commercial basis and are not occupied or available for occupation by anyone connected to the owner. If this relief applies, it must be claimed in an ATED return.
Filing and Payment Deadlines
ATED is payable for a chargeable period ending on 31 March each year, with returns due within 30 days of the new period starting. This means:
📌 For the 2025/26 period (1 April 2025 – 31 March 2026), returns must be filed between 1 April and 30 April 2025.
HMRC Compliance Checks
Over the coming months, HMRC will be contacting companies that:
- Own UK residential properties worth over £500,000
- Declared no profits in Corporation Tax returns between 2017 and 2020
- Either did not file an ATED return or claimed the commercial letting relief
HMRC is questioning whether these companies were truly operating on a commercial basis. If they believe a company was not run for profit, the ATED relief will not apply.
How to Respond
If your company receives one of these letters, you must review your ATED position and respond within 40 days. You may need to:
✔ Provide further information
✔ Make a disclosure
✔ File any outstanding returns
Failure to respond could result in a discovery assessment and potential penalties.
If you need guidance on your ATED obligations, speak to our property tax accountants today to ensure compliance and avoid unnecessary tax charges.