The annual tax on enveloped dwellings (ATED) is charged on companies, partnerships with a corporate member, and collective investment schemes that own UK residential property the value of which is greater than £32m.
From 1 April 2015, properties valued at more than £1m, up to £2m, will carry a charge of £7,000 per annum. From 1 April 2016 properties valued at more than £500,000, up to £1m, will carry a charge of £3,500 per annum. HMRC states that this consultation aims at ‘lessening the administrative burden on genuine businesses that hold residential properties worth more than £500,000 and are keen to limit this burden, especially for those entitled to claim reliefs.’
In the consultation document, HMRC presents two options for reducing the administrative burden caused by ATED. The first of these is to retain the current filing date but allow those customers who are eligible to claim a relief from ATED for more than one property, and who do not have an ATED liability, to submit a supplementary return after the end of the chargeable period. The second option is to introduce an exempt “status” regime for those entitled to claim relief, which could be confirmed at various intervals (for example, every three or five years). For reasons set out in the response, we prefer option 1.