While changes affecting private residential landlords have made headlines in recent years, the ATED regime is a significant cost for companies, LLPs and partnerships that own a UK residential property valued at more than £500,000.
The ATED regime requires you to file a return and pay tax due for the 2017-18 tax year by 30 April 2017, if you meet these criteria. Failure to file a return or pay this tax on time will result in significant penalties.
HM Revenue & Customs (HMRC) lists the following annual charges for properties within the ATED regime:
|Property value||Annual charge|
|More than £500,000 but not more than £1 million||£3,500|
|More than £1 million but not more than £2 million||£7,050|
|More than £2 million but not more than £5 million||£23,550|
|More than £5 million but not more than £10 million||£54,950|
|More than £10 million but not more than £20 million||£110,100|
|More than £20 million||£220,350|
A further consideration is that the ATED regime, from 1 April 2018, will be based on the value of the property at 1 April 2017 – until now, the charges have been based on the value of the property at 1 April 2012.
This means that you may, from next year, be subject to ATED where you previously were not. It also means that you may move up a band – something which could cost as much as £110,250 based on the 2017/18 annual charges.
You can choose to provide your own valuation or otherwise use a professional valuation for the purposes of ATED.
If carrying out your own valuation, however, it is important to consider that there are substantial penalties which apply in cases where tax has been underpaid because of undervaluing a property.
Toni Hunter, property expert at George Hay, said: “With the threshold falling and average house prices rising the revaluation will likely bring more properties into the ATED net. To plan effectively for next year’s return, it may be wise to consider commissioning valuations now. This could be particularly beneficial if the value is likely to sit near a key threshold limit as this will ultimately impact upon the tax liability.”
The UK property sector is going through challenging times. So now, more than ever, professional advice from expert advisors who understand the sector is crucial.
At George Hay, our property specialists will give you practical, proactive advice to help your business operate as efficiently and cost-effectively as possible. To find out more about what we can do for you, contact us.