• by a company
• by a partnership where one of the partners is a company,
• by a collective investment scheme - for example a unit trust or an open ended investment vehicle.
There are various reliefs and exemptions that mean you might not have to pay any ATED on your property or may reduce the amount you have to pay. You should consult with a tax specialist if you think you may be entitled to relief or exemption.
What is changing and what action do you need to take?
ATED properties are valued on every 1 April on the five year anniversary of 1 April 2012 so all properties will be revalued on 1 April 2017 then 1 April 2022 and so on. For properties acquired prior to 1 April 2012 the first valuation will be at 1 April 2012 and every five years after.
For property owned after 1 April 2012, you should use the value at the date you bought or acquired it. If your property is a new build or you’ve altered it to become a new dwelling you should use the earliest of the date it was first occupied or entered on the Council Tax Valuation Lists. The property will then have to be revalued again on the 1 April anniversary dates as set out above. For example a property acquired 1 July 2014 would need to be revalued at 1 April 2017.
To work out what you need to pay you will need to value your property. You can work out the value yourself or you can use a professional valuer. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount. The valuation could change if circumstances change, for example if your property is developed or converted or falls outside of ATED completely or moves back in again. HMRC can challenge your valuation and if they don’t agree with it, they can charge penalties and interest. For this reason it may be advisable to use an RICS qualified valuer to provide a “Red Book” valuation which is usually accepted by HMRC.
How to value different types of properties and multiple interests
If your property is mixed-use you only need to value the residential part. For example a shop with flat above it, only the flat is a dwelling and need to be valued.
If your property consists of two or more separate dwellings in the same building such as self-contained flats or terraced houses, each flat/house will be a dwelling and will be valued separately. However your properties may be valued as a single dwelling if:
• They are each owned by the same company or someone connected to the company and there’s internal access between them
• It consists of adjoining buildings with internal access
• The properties are not used or suitable to be used as a single dwelling
• Each of the dwellings is either unoccupied or is occupied/intended to be occupied by a relevant person, who is someone connected with the owner of the dwelling, or is occupying the dwelling on non-commercial terms, or is employed in connection with the occupation of a dwelling in the same building by a relevant person.
Where there are multiple interests in your dwelling, for example a freehold and a leasehold interest. The valuations are aggregated and your property valued as a single dwelling interest if they’re held by:
• the same person
• connected persons
However where one of the connected persons is an individual the property is only valued as a single dwelling interest if:
• the property value is more than £2 million and the company’s interest is worth more than £500,000
• the property value is less than £2 million and the company’s interest is worth more than £250,000
If you only own a property for part of a year, or it becomes or ceases being a residential property during the course of the year, the amount of ATED payable is reduced proportionally.
Pre-return banding check (PRBC)
If you are not sure which value band your property falls into then the valuation can be submitted to HMRC for a “pre-return banding check”. HMRC will not agree the specific valuation but will confirm the proposed banding of the property. You can ask for one if:
• you’re not due a relief that will reduce your ATED charge to nil
• your property valuation falls within 10% of a banding threshold
What you need to pay
The amount you’ll need to pay is worked out using a banding system based on the value of your property. The table below shows the chargeable amounts for 1 April 2017 to 31 March 2018.
|Property Value||Annual Charge|
| More than £500,000 but not more than £1 million
| More than £1 million but not more than £2 million
| More than £2 million but not more than £5 million
| More than £5 million but not more than £10 million
| More than £10 million but not more than £20 million
| More than £20 million
You will need to complete and send HMRC a return and pay anything you owe by 30 April if your property is within the scope of ATED on 1 April. Dwellings that become liable to ATED after the 1 April in any ATED period have 30 days from the date of purchase (90 days for newly built dwellings) to file an ATED return and pay any tax due. You can deal directly with HMRC or you may find it easier to appoint a tax specialist to act on your behalf.
Should you wish for a professional valuation we would be happy to assist and are ideally placed to do so. Chestertons has a dedicated team of chartered surveyors who deal with tax valuations for residential properties throughout Central and Greater London. The team have a proven track record preparing robust valuation reports that are undertaken to stringent RICS standards.
CLICK HERE TO REQUEST A VALUATION OR A PRIVATE INITIAL CONSULTATION WITH A TAX ADVISER.