In the latest attempt to dampen overseas demand for UK property, the annual tax on enveloped dwellings (ATED) charge has been extended to properties worth £500,000 upwards for non-natural persons and company acquisitions
The annual ATED charge now captures properties in the £500,000 to £1m price bracket for sales to non-natural persons, companies or other collective investment schemes. In these circumstances the dwelling is said to be ‘enveloped’ because the ownership sits within a corporate ‘wrapper’ or ‘envelope’.
The annual tax is charged in respect of ‘chargeable periods’ running from 1 April to 31 March.
James Hamand, head of professional valuations at Douglas & Gordon, said: ‘As was the case under the old SDLT [stamp duty land tax] regime, we are seeing fewer properties transacting at or just above threshold values, ie, a property theoretically worth £505,000 might now sell for £499,999 as owners take the new charges into account.
‘This makes taking valuation and legal advice, particularly in the London market, critical if investors are to take a long-term view, maximise the value of their portfolios and mitigate future liabilities’.
Chargeable amounts for 1 April 2016 to 31 March 2017
Property value | Annual charge |
|---|---|
More than £500,000 - £1m | £3,500 |
More than £1m - £2m | £7,000 |
More than £2m - £5m | £23,350 |
More than £5m - £10m | £54,450 |
More than £10m - £20m | £109,050 |
More than £20m | £218,200 |
Source: HMRC
The HMRC ATED guidance is here