How to Value Your Property for ATED

Introduction

If your company owns a UK residential property worth more than £500,000, you need to value it correctly to work out which Annual Tax on Enveloped Dwellings (ATED) band it falls into. Getting the valuation right is crucial — it determines whether you need to pay ATED and how much you'll owe. You must also revalue your property every five years at fixed dates set by HMRC.

Which valuation date to use

The valuation date depends on when you acquired the property and which five-year revaluation cycle applies.

For properties acquired on or before 1 April 2022:

Use 1 April 2022 as your revaluation date for the current cycle (covering the 2023 to 2024 through to 2027 to 2028 chargeable periods).

For properties acquired after 1 April 2022:

Use the date you acquired the property as your valuation date.

The next fixed revaluation date for all properties will be 1 April 2027, which will apply to chargeable periods from 2028 to 2029 onwards.

How to value your property

You can work out the value yourself or hire a professional valuer. The valuation must be in pounds sterling and based on an "open-market willing buyer, willing seller basis" — essentially, what the property would sell for on the open market.

The valuation must be a specific amount, not a range. If you don't own the unencumbered freehold interest (for example, if you hold a leasehold), the valuation may not be based on vacant possession.

HMRC can challenge your valuation if they believe it's incorrect, and they may charge penalties and interest if they find it's wrong.

Understanding the five-year revaluation cycle

ATED uses fixed five-year revaluation cycles that apply to all properties, regardless of when you bought them:

• 1 April 2012: covered chargeable periods 2013 to 2014 through to 2017 to 2018
• 1 April 2017: covered chargeable periods 2018 to 2019 through to 2022 to 2023
• 1 April 2022: covers chargeable periods 2023 to 2024 through to 2027 to 2028 (the current cycle for 2025/26)

For any chargeable period, you use whichever is later: the initial valuation date (when you acquired the property) or the most recent revaluation date.

Special valuation situations

Mixed-use properties

If your property combines residential and non-residential use (for example, a shop with a flat above), you only value the residential part for ATED purposes.

Properties with multiple flats

If your property consists of self-contained flats, each flat counts as a separate dwelling and must be valued separately.

Linked dwellings

Multiple dwellings may be valued as a single property if:

• They're each owned by a company (or someone connected to the company) and have internal access between them
• They consist of adjoining buildings with internal access, such as two terraced houses knocked through

Multiple interests in the same dwelling

When more than one interest exists in a property (such as both freehold and leasehold interests), these are combined and valued as a single dwelling interest if they're held by the same person or connected persons.

However, when one of the connected persons is an individual, the property is only valued as a single dwelling interest if:

• The property value exceeds £2 million and the company's interest is worth more than £500,000, or
• The property value is £2 million or less and the company's interest is worth more than £250,000

New builds or reconstructed properties

For newly constructed properties or properties altered to become new dwellings, use whichever date comes first:

• The date it was first occupied, or
• The date it's treated as coming into existence for Council Tax (or domestic rating in Northern Ireland)

Part disposals

If you dispose of part of the property (for example, selling a small parcel of land or granting a lease), you must revalue the remaining property based on its market value on the date of disposal. This valuation applies until the next 1 April revaluation date.

Pre-return banding check (PRBC)

If you're unsure which ATED band your property falls into, you can ask HMRC to check it before submitting your return — but only if:

• You're not claiming a relief that reduces your ATED charge to nil, and
• Your property valuation falls within 10% of a banding threshold

The 10% banding thresholds where you can request a PRBC are:

• £450,000 to £550,000
• £900,000 to £1.1 million
• £1.8 million to £2.2 million
• £4.5 million to £5.5 million
• £9 million to £11 million
• £18 million to £22 million

How to apply

Apply using the PRBC form well in advance of your return deadline, as late returns can incur penalties.

You'll receive an acknowledgement and reference number to include on your return. Within 30 working days (longer during busy periods), HMRC will either:

• Agree your chosen banding is correct
• Request more information
• Tell you the correct banding if they disagree with yours
• Arrange to inspect the building if needed

HMRC typically accepts valuations from professional property valuers but may still enquire into later returns and challenge those valuations.

If you don't receive your PRBC in time

Submit your ATED return and payment using the banding you believe is correct. HMRC may open an enquiry into your return to verify the appropriate banding.

If you receive your PRBC after submitting and HMRC disagrees with your valuation, you'll need to complete an amended return.

If you disagree with HMRC's PRBC

If your estimate means you owe tax, submit your return using your own valuation. HMRC may open an enquiry to examine the banding again.

If you believe your property is below the valuation threshold and no tax is due, HMRC may issue a 'determination' — an estimate of what they think you owe based on their valuation of your property.

Sources

• Annual Tax on Enveloped Dwellings: work out the value of your property

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.