ATED receipts on the rise

The Annual Tax on Enveloped Dwellings (ATED) is broadly an annual tax on UK residential properties held in a ‘corporate envelope’, typically a company. Over the years since its introduction, the tax receipts generated from ATED have dwindled but it seems things have turned a corner. The total ATED receipts during the 2022/23 financial year amounted to a substantial £124m. This represents a 4% increase (equivalent to £5m) compared to the previous year. 

The 2022/23 year shows an upward trend in ATED receipts. Notably, this was only the second year since the 2015/16 financial year in which ATED receipts had risen. The 2021/22 financial year also saw an increase rising from £111m to £119m. ATED only applies to UK residential properties with a value of over £500,000, and in 2022/23 there was an increase in the number of properties with a value between £500,000 and £1m that were subject to ATED. As noted below, this may not even truly take into account the property inflation we have seen in recent years and there could be a sharper increase in ATED receipts in the coming years.

A total of 4,800 liable ATED declarations were made in the 2022/23 financial year. This figure shows a marginal decrease compared to the previous year. The most significant change occurred in the £10m to £20m price band, which experienced a 7% decrease compared to the 2021/22 financial year. It is understood that when ATED was first introduced in 2013, it was yet another tax on UK property and its aim was to discourage high value properties being held within corporate structures. Whilst these latest statistics indicate that properties within this price band may now potentially be coming out of these structures, it is not the average homebuyer who would benefit if these properties were put up for sale.

Further to this, in the 2022/23 financial year, 22,770 relief declarations were made. Interestingly, this marks the first year since ATED’s introduction that relief declarations have declined. The most common type of relief claimed is rental relief, which saw an increase in declarations in 2022/23 compared to the previous year. However, property developers’ relief has seen a notable decrease. This may show a change in the use of high value residential property, which may be linked to a slower property development market at the time. 

Given the requirement to revalue properties as at 1 April 2022 for the 2023/24 ATED returns, we could see more properties fall within the regime. With taxes on UK property becoming even more of a burden, the statistics for 2023/24 could see a different story being told. 

Overall, the ATED landscape witnessed both growth in receipts and changes in relief patterns in the 2022/23 year. Property owners and businesses must navigate these dynamics while ensuring compliance with ATED regulations. As a reminder, ATED returns for 2024/25 (covering the period 1 April 2024 to 30 March 2025) are due for submission by 30 April 2024, and penalties can apply, even if there is no charge to pay.