ATED is a tax levied on certain residential properties with a value in excess of £500,000 owned by companies, partnerships with corporate members, and collective investment schemes, which may require the submission of an annual ATED return to HMRC.
The ATED return deadline is 30 April each year, and those within the regime must ensure their return is submitted on time to avoid HMRC penalties.
In this blog, we'll delve into the intricacies of ATED, exploring its purpose, applicability, rates, exemptions, compliance requirements, and potential implications for property owners.
Background to the Regime
ATED was introduced by the UK government in 2013 as part of efforts to deter the holding of high-value residential properties through corporate structures, often perceived by HMRC to be for tax avoidance purposes.
ATED is an annual tax payable mainly by companies that own UK residential property valued in excess of £500,000 on 1 April 2022 (or on acquisition date, if later). Note that the property must be revalued every 5 years (next on 1 April 2027).
However, unlike other self-assessment tax returns, ATED returns need to be completed in advance of the upcoming tax year. For example, for the chargeable period running from 1 April 2026 to 31 March 2027, the ATED return will need to be filed by 30 April 2026.
ATED applies to:
- Companies.
- Partnerships where any of the partners is a company.
- Collective investment schemes — for example, a unit trust or an open-ended investment vehicle.
Entities to which ATED applies on 1 April are required to submit a return, settle any tax due, and/or claim relief for the 2026/27 chargeable period (1 April 2026 - 31 March 2027) no later than the 30th of April 2026.
What is the ATED Charge?
The amount of ATED payable depends on the value of the property – the higher the property's value, the greater the annual tax charge. The current ATED bands and corresponding annual charges for 2026/27 are as follows:
| Taxable Value of the Property |
ATED Charge for 2026/27 Chargeable Period |
| £500,001 to £1 million |
£4,600 |
| £1,000,001 to £2 million |
£9,450 |
| £2,000,001 to £5 million |
£32,200 |
| £5,000,001 to £10 million |
£75,450 |
| £10 million to £20 million |
£151,450 |
| Over £20 million |
£303,450 |
What is a “Dwelling”?
A “dwelling” refers to a residential property. Specifically, it includes any building, or part of, which is used or is suitable for use as a single dwelling (meaning as a residential property), or is in the process of being constructed or adapted for such use. For example, this could include houses, apartments, and any other forms of residential accommodations where one lives or could live.
A property is considered a dwelling if all or part of it is used, or could be used, as a residence. This also includes any gardens, grounds, and buildings within them.
Certain properties that are not classed as dwellings include hotels, guest houses, boarding school accommodation and hospitals.
Is there any Exemptions?
Whilst residential properties are generally not exempt from ATED, there are specified exemptions for certain types of residential property. For example, properties used for commercial purposes, let to third parties on a commercial basis, or owned by a charitable company can qualify for exemptions from ATED.
Furthermore, there are various reliefs available to relieve genuine commercial businesses from the ATED charge. For example, property rental businesses, farmhouses, and dwellings open to the public for 28 days a year. Note that, even if the relief reduces the ATED charge to nil, a Relief Declaration Return is still required.
In our experience, the ATED charge generally applies where an individual is living in a residential property worth more than £500,000, where that property is owned by a company in their personal ownership. Clearly this is not the only scenario where it can apply, but this is the situation we see most frequently.
What Action do I Need to Take?
Firstly, we would recommend that all companies and partnerships with a corporate partner etc undertake a review of their property portfolio to identify if any residential properties are held and if so what the value of those properties are. It is important to remember that when determining the value of the properties, you must consider the market value on 1 April 2022, or the acquisition date if later than this date.
If a company holds residential property that falls within the ATED regime they must register with HMRC and submit an annual ATED return, even if no tax is due as a result of the relief available!
The deadline for ATED returns and payment of ATED is the 30th of April each year, with penalties imposed for late filing or payment. It’s important to note that unlike other self-assessment tax returns, ATED returns need to be completed in advance of the upcoming year! For property owners affected by ATED, compliance with the reporting requirements is crucial to avoid penalties.
HMRC’s website to submit your ATED return can be found
here.
What to do if I Buy a Property in 2026-27?
If you acquire a property that falls within the scope of ATED in the 2026/27 tax year, you must file a return for this newly acquired property. This return must be submitted to HMRC within 30 days, or within 90 days for new builds.
Interaction with Other Taxes
In addition to being subject to ATED, companies which purchase residential property worth more than £500,000 may be subject to additional stamp duty land tax charges. In some cases, this can be up to 19% unless reliefs apply.
Furthermore, HMRC will also levy surcharges on acquisitions of residential property by companies. This is currently a usual rate of 5% for properties bought for more than £500,000.
However, there is also a 2% surcharge on residential properties in England and Northern Ireland bought by non-UK residents on or after 1 April 2021. The surcharge applies on top of all other residential rates of SDLT, including the 5% higher rate surcharge.
Summary
When looking at the acquisition of residential properties through a company, whilst there are many benefits to holding property in this way, the costs of acquisition can be expensive, and we would recommend seeking advice before completing any transaction.
Case Study
We had recently assisted a client who was unaware of the requirement to file an ATED return, despite qualifying for relief under employee occupation. HMRC contacted them, informing them of penalty fees for failing to submit a Relief Declaration Return for ATED for the chargeable periods ended 31/03/2016 to 31/03/2022.
It is crucial to note you need to file a Relief Declaration Return by 30 April for the tax year ahead. If this return is more than 3 months late, HMRC may charge you will an additional penalty fee of £10 each day it remains outstanding for a maximum of 90 days. There is also an initial £100 penalty and further penalties if the return is 6 and 12 months late.
Our client had to pay £9,100 for ATED late filing penalties all together.
Do not make a similar mistake!
Get in touch
With the ATED return deadline approaching, now is the ideal time to
consult with our trusted tax advisors at Stratos to ensure compliance and mitigate any potential penalties. Additionally, feel free to reach out if you require further details or wish to discuss eligibility for reliefs.
Frequently Asked Questions Regarding ATED
When is the ATED Return Deadline?
The ATED return deadline is normally 30 April each year for the upcoming chargeable period.
Do I Need to Submit an ATED Return if no Tax is Due?
This depends. Companies must still submit a Relief Declaration Return to HMRC even if a relief reduces their tax liability to nil. However, if an exemption applies, no ATED return is required.
What Happens if an ATED Return is Filed Late?
HMRC charges an initial £100 penalty, followed by (if the return is 3 months late) daily penalties of £10 per day for up to 90 days at their discretion if the return remains outstanding. There are additional penalties if the return is 6 and 12 months late and there are also late payment penalties and late payment interest.
Late payment interest is non-appealable. However, if there is a reasonable excuse, it may be possible to appeal penalties.
Who Needs to File an ATED Return?
Companies, partnerships with corporate members, and certain collective investment schemes that own UK residential property valued above £500,000 may need to submit an ATED return (assuming there is no exemption).
What Properties Qualify for ATED Exemptions?
Properties used for commercial letting, property rental businesses, farmhouses used in agricultural operations, and properties owned by charitable companies may qualify for ATED reliefs or exemptions.
This list is not exhaustive, and professional advice should be sought if it is believed that an exemption exists.
