My client company is intending to purchase a residential property for £1.5m. This property will initially be rented to the director’s son at market value for a short period before let to a third party. Would the company come within the charge to annual tax on enveloped dwellings (ATED)? Is there any relief we can claim for this?

First, we need to establish whether the company is within the scope of ATED, see FA 2013 s94. Given the residential property is over £500,000 at the later of acquisition and the revaluation period (1 April 2022) and it is owned by a company, they will be in the scope of ATED.

ATED returns are due on a chargeable person regardless of whether they have ATED to pay. This means if a company has a single dwelling over £500,000 and they are looking to claim relief, they are still due to file an ATED return. ATED returns are due within 30 days of the start of the chargeable period, and it is possible to claim interim relief where circumstances change midway through a chargeable period, resulting in less tax.