ATED: Annual Tax On Enveloped Dwellings

Are your properties now affected?

POSTED BY HELEN BEAUMONT ON 03/11/2017 @ 8:00AM

The Annual Tax on Enveloped Dwellings was implemented to stop wealthy overseas buyers from setting up a UK company to avoid paying duties on the purchase. But HMRC has reduced the tax threshold and it's worrying many people ...

The threshold for the Annual Tax on Enveloped Dwellings has been reduced!

ATED was first introduced in 2012. It is designed to be paid annually and was initially applied only to houses with a value greater than £2m. As of April last year, the tax threshold was reduced and it now applies to properties worth more than £500,000. This means that many property investors in the south of England are going to be hit.

"Very few property investors, developers and their advisors that I speak to are aware of these tax rules!"

Let's be honest here, £500,000 doesn't buy much in the south-east of England and even less in London. Many buy-to-let investors increasingly buy properties through companies so they could now be faced with thousands of pounds in fines. This situation could arise even if the properties are fairly modest in value.

Yes, there are exemptions for properties which are rented out privately, the owner must still file a return and risks being fined if they don't. It worries me that so many landlords may not realise their properties are now liable for ATED.

Any exemptions must be claimed on an annual basis, by 30 April for the coming tax year, so 30 April 2017 for the 2017/18 tax year; An in-year claim must be made where an ATED property is acquired or starts to fall within the regime and there are strict time limits for making claims - and possible penalties - if you fail to make a claim, even if there's no tax due.

The complexities of ATED are only going to be exacerbated as landlords are now rushing to register companies to get around changes to tax relief on mortgage payments, which are currently being phased in.

HMRC are issuing enquiry letters where a company acquires a new property which potentially falls within the ATED regime and no claim has been made. Some properties will need to be revalued, which means that although they had previously escaped the charge, they will now fall within the remit.

"It is really important that you speak to your tax advisor about this!"

If you're a landlord and want to know more about the Annual Tax on Enveloped Dwellings, you can call me on 01908 774323 or click here to ping me an email and let's see how I can help you.

Until next time ...

HELEN BEAUMONT
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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.