ATED receipts continue to rise

Recent Annual Tax on Enveloped Dwellings (ATED) statistics show ATED receipts have risen for the third consecutive financial year. ATED is broadly an annual tax on UK residential properties with a value of £500k or more that is held in a ‘corporate envelope’, typically a company. 

During the 2023/24 financial year total ATED receipts amounted to £132m, which represents a 6% increase (equivalent to £8m) compared to the previous year. This increase is perhaps expected given that there was an average increase on all ATED charges of approximately 10% for the 2023/24 financial year, compared to 2022/23.

The valuation date for properties to determine their ATED banding is based on the value of the property at the fixed five yearly revaluation date, or the price at acquisition, if that was more recent. The 2023/24 financial year was the first year that was impacted by the new valuation date of 1 April 2022. Since the last fixed valuation date of 1 April 2017 the average price of UK residential property has increased by around 25%, therefore the number of properties potentially falling within the scope of ATED was expected to increase.

Interestingly, the total number of liable ATED declarations has remained steady, with 5,170 in the 2023/24 financial year, compared to 5,160 in the previous year. The number of liable returns generally remained unchanged across all price bands, with the exception of the £500k to £1m and £1m to £2m price band which saw a slight increase.

There are a number of reliefs available which may reduce an ATED liability to nil, these reliefs apply to the entity rather than per property, as is the case for liable returns. For example, if a company has multiple properties that are let, then only a single rental relief return would be required. In the 2023/24 financial year, 28,510 relief declarations were made. This represents an 11% increase compared to the 2022/23 financial year. The most common relief continues to be rental relief which accounts for 82% of all relief claims. Notably, rental relief claims increased by 13% compared to the 2022/23 financial year, which could be due to the new fixed valuation date of 1 April 2022 bringing more ‘enveloped’ properties that are commercially let within the scope of ATED.

Overall, the ATED landscape witnessed both growth in receipts and the number of relief declarations in the 2023/24 financial year. Property owners and businesses must navigate these dynamics while ensuring compliance with ATED regulations. As a reminder, ATED returns are a little unusual in that they are filed in advance of the tax period to which they relate to. For 2025/26 (covering the period 1 April 2025 to 30 March 2026), such returns are due for submission by 30 April 2025, and penalties can apply, even if there is no charge to pay. Amended returns may also be required depending on any changes during the tax year.

Given the impending abolition of the furnished holiday lettings (FHL) tax regime, a lot of FHL owners may have recently transferred personally owned properties to companies or may be contemplating transfers in the near future. When a property that is reportable under ATED is acquired by a corporate entity during a tax year, an ATED return is generally required to be submitted within 30 days. Due to this tight deadline, any taxpayers contemplating such transfers may wish to ensure that they have considered their ATED reporting obligations in advance.