Don’t Get Caught by ATED Penalties – A Reminder for Property-Holding Companies

The Annual Tax on Enveloped Dwellings (ATED) remains one of the most commonly overlooked tax regimes affecting companies holding UK residential properties.  

As the thresholds for ATED have steadily lowered, more businesses find themselves within its scope, and the consequences of non-compliance can be significant. 

Full details of the rules can be found at; 

https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics#overview 

Important: The ATED deadline for existing properties is 30th April 2025. Companies that owned high-value residential property on 1 April 2025 must submit their return and pay any ATED charge by this date. 

What is ATED? 

ATED is a tax payable by companies (or other non-natural persons, such as partnerships with corporate members or collective investment schemes) that own UK residential property valued above £500,000. The regime was introduced to discourage the "enveloping" of residential properties within corporate structures and mitigate liability to other taxes, such as Stamp Duty Land Tax. 

Importantly, ATED applies only to non-natural persons (NNPs). It does not affect individuals holding property in their name. 

Who Must File an ATED Return? 

An ATED return is mandatory even if: 

• No tax is due; or 

• You intend to claim a relief or exemption. 

In other words, if you believe ATED doesn’t apply because your property qualifies for relief (e.g., commercial letting or property trading), you must still file a return to claim the relief. 

Rates and Penalties 

The amount you’ll need to pay is worked out using a banding system based on the value of your property. 

Chargeable amounts for 1 April 2024 to 31 March 2025 

Penalties: Annual Tax on Enveloped Dwellings (ATED); 

Reliefs and Exemptions 

The good news is that a range of reliefs may be available.  

However, reliefs must be claimed through a Relief Declaration Return. They are not automatically applied, and incorrect assumptions can lead to unnecessary penalties. Care needs to be taken to ensure any reliefs and exemptions do apply. Full details are available at:  

https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-reliefs-and-exemptions 

Key ATED Deadlines 

Scenario Filing Deadline  

Property acquired during year Within 30 days of acquisition  

Newly built property Within 90 days of becoming a dwelling  

Existing properties 30 April 2025  

If your company owns a residential property within the ATED regime and held it on 1 April 2025, the return and payment must be submitted by 30 April 2025—regardless of whether any tax is due.