HMRC’s Agent Update 58 highlights that ‘HMRC has been designing a new digital service for the ATED’, and agents and their ‘clients can now register to use this new service. This will give time to complete the registration steps in readiness for the April 2017 filing period.’
As a reminder, ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. An ATED return is required if the property:
is a dwelling
is in the UK
was valued at more than:
is owned completely or partly by a:
ATED is an annual tax charged on ‘non-natural persons’ such as companies in respect of ‘chargeable periods’ (which are from 1 April to the following 31 March).
The annual chargeable amount (which is increased in line with increases in the Consumer Prices Index depends on the ‘property value’ and is in bands as follows:
| Property value | 1 April 2016-March 2017 | 1 April 2017-31 March 2018 |
| £500,001 to £1m | £3,500 | £3,500 |
| £1,000,001 to £2m | £7,000 | £7,050 |
| £2,000,001 to £5m | £23,350 | £23,550 |
| £5,000,001 to £10m | £54,450 | £54,950 |
| £10,000,001 to £20m | £109,050 | £110,100 |
| £20,000,001 and over | £218,200 | £220,350 |
You can find examples at bit.ly/ACCA-TA.
A Ltd purchased a dwelling that represents a single dwelling interest on 10 January 2017 for £12,500,000. This property is subject to ATED with no reliefs available.
A Ltd will need to file the ATED return by 9 February 2017 (within 30 days after the date of acquisition) to cover the period from 10 January 2017 to 31 March 2017.
Amount of tax chargeable
The ‘relevant day’ is the first day in a chargeable period on which the chargeable person is within the charge. In this example the relevant day is 10 January 2017.
Amount chargeable is the ‘annual chargeable amount’ x ‘relevant fraction’
‘Relevant fraction’ is N/Y
Amount of tax chargeable is £109,050 x 81/365 = £24,200.14.
In the year from 1 April 2017 to 31 March 2018, assuming there are no changes in circumstances, the amount of tax chargeable will be £110,100.
As in example 1 above, A Ltd purchased a dwelling that represents a single dwelling interest on 10 January 2017 for £12,500,000. This property is subject to ATED with no reliefs available.
On 1 November 2017 it is decided that the dwelling will be rented to a person who is not a ‘non-qualifying individual’. The tenant takes up occupation on 4 January 2018.
A Ltd will need to file the ATED return by 30 April 2017 (within 30 days after the date of acquisition) to cover the period from 1 April 2017 to 31 March 2018.
Amount of tax chargeable is £110,100 for the year to 31 March 2018.
On or after 4 January 2018 A Ltd can submit an ‘amended return’. The taxpayer has until 12 months after the end of the chargeable period to which the amendment relates, to submit the ‘amended return’ – in this case, until 31 March 2019.
For the period 1 April 2017 to 3 January 2018 (known as the ‘pre-claim period’), the amount of tax chargeable will be £110,100 x 278/365 = £83,856.99.
A Ltd may send in an amended return for 2017/18 showing a liability of £83,856.99, a claim for property rental business relief, and include a repayment claim for £26,243.01 (£110,100 less £83,856.99).
Substantial acquisitions and disposals
A ‘substantial acquisition’ or ‘substantial disposal’ will result in a revaluation event for the purposes of ATED. Generally an acquisition of a chargeable interest in a dwelling is a ‘substantial acquisition’ if the chargeable consideration for the acquisition is £40,000 or more. A disposal of part (but not the whole) of a single-dwelling interest is a ‘substantial disposal’ if the chargeable consideration for the acquisition of the chargeable interest by the person acquiring is £40,000 or more.
The revaluation would be the market value of the interest on the date of the acquisition or disposal.
B Ltd held a dwelling that represents a single dwelling interest on 1 April 2012 and at that date it was valued at £8,000,000. This property is subject to ATED with no reliefs available. On 1 June 2017 B Ltd sold some of the land which formed part of this property for £350,000. On 1 June 2017 the reduced interest which B Ltd held in the dwelling was valued at £11,000,000.
B Ltd will need to file the ATED return by 30 April 2017 (within 30 days after the date of acquisition) to cover the period from 1 April 2017 to 31 March 2018.
Amount of tax chargeable is £54,950 for the year to 31 March 2018.
A ‘return of adjusted chargeable amount’ will then be required to be filed as the adjusted chargeable amount for the chargeable period is greater than previously submitted and that this difference is not as a result of a claim to interim relief. This further return must be made within 30 days of the beginning of the chargeable period that follows the chargeable period in which the event that increased the value of the single-dwelling interest occurred or the chargeable period to which the interim relief claim was made. In this case, the further return must be filed by 30 April 2018.
B Ltd must send in a further return for 2017/18 as the amount of tax chargeable has increased. This is because the value of the single-dwelling interest has moved to the next band from 1 June 2017.
The additional amount of tax chargeable will be:
(£110,100 less £54,950) x 274/365 = £41,400.27
There are 274 days from 1 June 2017 to 31 March 2018.
On 1 April 2012 the dwelling was valued at £8,000,000 which gave an amount of tax chargeable of £54,950 for the year to 31 March 2018.
On 1 June 2017 the reduced interest in the dwelling had a valuation of £11,000,000, which gave an amount of tax chargeable of £110,100.
HMRC has issued detailed guidance on ATED.