ATED was introduced in 2013 and is an annual tax payable mainly by companies that own a UK residential property, where the value of the property exceeds the minimum threshold. Partnerships, where one of the partners is a company, and collective investment schemes are also within the ATED regime.
For ATED returns from 1 April 2016 onwards, the minimum threshold is that the property was valued at £500,000 on 1 April 2012 or at acquisition if later.
The amount charged is determined by a banding system, which depends on the value of the property and the applicable year. For the year ended 31 March 2018 the ATED charge is £3,500 for properties valued at more than £500,000 but less than £1 million and the ATED charge goes through the relevant bands with the maximum charge for this year being £220,350 for properties worth more than £20 million.
A number of reliefs are available, including where a UK residential property is rented on a commercial basis. However, even if a relief applies an ATED return must still be submitted to HMRC and penalties will be charged for ATED returns submitted late.
If a UK residential property is sold, which is completely or partly owned by a company then ATED capital gains tax (ATED CGT) will be due, which is at 28%. If the company holding the UK residential property is a non-UK resident company for tax purposes then non-resident capital gains tax (NRCGT) may also be due. If both ATED CGT and NRCGT are applicable then ATED CGT takes precedence, however a NRCGT return would still need to be submitted to HMRC.