Annual Tax on Enveloped Dwellings – What is it?

Annual Tax on Enveloped Dwellings (‘ATED’) is a charge due on a dwelling owned by a company, partnerships with at least one corporate member, or an investment scheme.

 

What is a dwelling?

A dwelling is a property that is:

  • Used wholly or partly as a residence
  • In the process of being adapted (or constructed) into a residence.
  • Undeveloped land (only subject to ATED in certain conditions)

 

ATED Return Requirements

For the year 1 April 2025 to 31 March 2026, ATED returns must be filed on or before 30 April 2025.

The ATED charge applies when the dwelling exceeds a taxable value. This is currently set as £500,000 in 2025-26

For 2025-26, the taxable value of a dwelling is its value as of 1 April 2022. If a dwelling is acquired after this date, the cost will be the value.

 

What if I don’t submit my ATED return on time?

There are penalties due for any ATED returns that are not submitted by the 30 April deadline and any payments due not made by the date.

 

The following table outlines the penalties incurred for not filing the ATED Return and/or not paying the tax:

Late filing Late payment Penalty
Miss filing deadline   £100
  30 days late 5% of the tax due
3 months late   Daily penalty of £10 a day for 90 days (max £900)
6 months late   5% of tax due or £300 (the greater of the two)
  6 months late 5% of tax outstanding as of that date
12 months late   5% or £300 if greater, unless HMRC believes taxpayer is deliberately withholding information
  12 months late 5% of tax due as of that date
12 months & taxpayer deliberately withholds information  

Based on behaviour:

  • Deliberate and concealed – 100% of tax due or £300 if greater
  • Deliberate but not concealed – 70% of the tax due or £300 if greater

 

What are the current charges for ATED in 2025/26?

The current charges are as follows:

Property Value Annual charge
More than £500,000 up to £1 million £4,450
More than £1 million up to £2 million £9,150
More than £2 million up to £5 million £31,050
More than £5 million up to £10 million £72,700
More than £10 million up to £20 million £145,950
More than £20 million £292,350

These charges are only applicable if the dwelling does not qualify for any ATED reliefs.

 

Are there any reliefs?

There are various reliefs provided to any dwellings during the tax year. Conditions must be met.

Reliefs may be claimed for:

  1. Property Rental Businesses
  2. Dwellings opened to the public
  3. Property Developers
  4. Property traders
  5. Financial institutions acquiring dwellings in the course of lending
  6. Occupation by certain employees or partners
  7. Farmhouses
  8. Providers of social housing.

 

How we can help

Understanding whether your property qualifies for any reliefs or whether there may be an ATED charge due can be daunting. It is essential to understand whether your dwelling is subject to ATED ahead of 30 April 2025.

At Lewis Brownlee, our tax specialists can help you:

  • Review your tax position.
  • Identify any reliefs available to you
  • Submit your ATED Return ahead of the 30 April 2025 deadline.

 

If you need assistance on your ATED return, get in touch with our team today.

 

Lewis Pridgeon
Author Bio

Lewis Pridgeon  |  Tax Compliance Manager

Lewis joined the tax team in 2013 and has since become a full member of the Association of Taxation Technicians. He has extensive knowledge across many areas of tax and accountancy, with a particular focus on personal tax clients. Lewis has developed expertise in advising non-resident landlords and specialises in agricultural and horticultural tax planning.

Let us guide you through the details and help you prepare for what lies ahead. Contact us for expert advice on your tax matters.

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