Does your company own a residential property worth more than £500,000? That’s a pretty modest house in the London area.
If it does, you need to submit a tax return to report amounts due for the Annual Tax on Enveloped Dwellings (ATED), or claim relief on an ATED relief form. An ATED year runs from 1 April to 31 March and the ATED forms must be submitted online by 30 April during the relevant year, with any tax due payable by the same date. Stiff penalties apply for late returns, or late paid tax.
The ATED due for the year starting on 1 April 2018 varies between £3,600 for properties worth up to £1m, and £226,950 for properties worth over £20m. The property’s value for ATED purposes is its open market value at 1 April 2017, or on the acquisition date if later.
Landlords who have transferred their residential property portfolios into companies need to check whether any of those properties were worth over £500,000 on the day the company completed the purchase. In that case, an ATED return will be required for the year in which the transfer occurred, and for subsequent years.
The first ATED charge is payable within 30 days of the completion date. In most cases a relief can be claimed, such as where the property is let on a commercial basis to tenants who are not connected to the company.
As relief from the ATED charge is claimed in advance, you must be careful to report to HMRC if the conditions for the relief are broken by, say, letting to tenants who are connected to the main shareholder of the company. In that case, an amended ATED return must be submitted within 30 days of the start of the next year, so by 30 April 2018 for a condition broken in 2017/18.