The firm, enveloped dwellings and the taxman

The firm, enveloped dwellings and the taxman

Q. My company has owned a couple of dwellings since 2010 and we have always filed annual tax on enveloped dwellings (ATED) returns or relief declaration returns. I am concerned that there have been some changes that might have an impact on our 2018 to 2019 returns this April.

A. This client is right to query this as there are a number of changes which will impact the returns for the 2018 to 2019 period to cover the ATED year which runs from 1 April 2018 to 31 March 2019.

Every dwelling owned by a non-natural person – a company, a partnership with a company member, or a collective investment scheme – at 31 March 2017 must be revalued at 1 April 2017. Therefore, a property that was valued at for example, £400,000 in 2012 may have been outside of the scope until now. However, the mandatory revaluation might now bring this company into the ATED regime for 2018 to 2019.

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If a dwelling (s112 Finance Act 2013) has a taxable value of more than £500,000 on 1 April 2017, or at acquisition if that was later than 1 April 2017, then it will fall within the ATED regime.  

The 1 April 2017 brought about the first five-yearly revaluation date for ATED and this revaluation figure will be needed for the first time when preparing ATED returns for periods from 1 April 2018 onwards (s102 Finance Act 2013). There are reliefs and a relief declaration return would be completed where applicable.

The ATED is calculated using a banding system based on the value of the dwelling. The annual chargeable amount for 2018 to 2019 has also risen to £3,600 (up from £3,500) for properties ranging from £500,001 to £1m. These rates are for a whole year and are pro-rated for parts thereof, as necessary (s99 Finance Act 2013).

From the 1 April 2018, all online ATED return must be filed using HMRC’s new ATED digital service and the old online forms will be withdrawn from 31 March 2018. HMRC have urged agents to register early for the new online service before the 2018 to 2019 filing window opens on 1 April 2018. The online service can be used for both chargeable returns and relief declaration returns.  If a return is needed for any years from 1 April 2015 then it must be filed online.

Finally, it’s worth noting here that a return must be filed by 30 April (2018 in this example) for that year if the property was held at 1 April and within 30 days if it was acquired after that date.

Ben Chaplin is a managing director at Croner Taxwise