What is Annual Tax on Enveloped Dwellings?

Annual Tax on Enveloped Dwellings (ATED) is an annual tax that companies and certain other corporate bodies must pay if they own UK residential property valued at more than £500,000. If you're a company director whose business owns residential property, you need to know whether you must register and pay this tax. Relief may be available depending on how you use the property.

Who must pay ATED?

You must complete an ATED return and potentially pay tax if your property meets all of these conditions:

• It is a dwelling (a property used or capable of being used as a residence, such as a house or flat, including gardens and grounds)
• It is located in the UK
• It was valued at more than the threshold that applied when you acquired it:

- £2 million for returns from 2013 to 2014 onwards

- £1 million for returns from 2015 to 2016 onwards

- £500,000 for returns from 2016 to 2017 onwards

• It is owned completely or partly by:

- A company

- A partnership where any of the partners is a company

- A collective investment scheme, such as a unit trust or open-ended investment vehicle

You must submit returns on or after 1 April in any chargeable period (which runs from 1 April to 31 March).

What counts as a dwelling?

A dwelling is any property that is used, or could be used, as a residence. This includes houses and flats, along with any gardens, grounds and buildings within them.

Some properties are not classed as dwellings and therefore do not fall within ATED. These include:

• Hotels
• Guest houses
• Boarding school accommodation
• Hospitals
• Student halls of residence
• Military accommodation
• Care homes
• Prisons

How to value your property

The amount of ATED you pay depends on which value band your property falls into. You must value your property using specific valuation dates that change every five years.

For the current revaluation period covering the five chargeable periods from 2023 to 2024 through 2027 to 2028, the revaluation date is 1 April 2022.

If you acquired your property:

• On or before 1 April 2022 — use 1 April 2022 as the revaluation date
• After 1 April 2022 — use the date you acquired it as the valuation date

The next revaluation date will be 1 April 2027.

How much you'll pay in 2025/26

ATED charges are based on property value bands. For the current tax year (1 April 2025 to 31 March 2026), the annual charges are:

• 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

For 2026/27, the charges increase slightly:

• More than £500,000 up to £1 million: £4,600
• More than £1 million up to £2 million: £9,450
• More than £2 million up to £5 million: £32,200
• More than £5 million up to £10 million: £75,450
• More than £10 million up to £20 million: £151,450
• More than £20 million: £303,450

If you only own the property for part of the year, or claim relief for part of the year, the charge may be reduced proportionately.

Reliefs and exemptions

You may not have to pay ATED even if you own a qualifying property. Reliefs and exemptions are available depending on how you use the property. You must still submit an ATED return to claim relief, but you won't pay any tax.

Do you need to register?

If you're not already registered, you'll need to register for the ATED online service. You can use this service to:

• Appoint an agent to act on your behalf
• Submit your returns online
• Pay any tax you owe

Other taxes to consider

Beyond ATED, you may also face:

• Stamp Duty Land Tax when you buy your property — there's a higher rate for corporate bodies
• Corporation Tax if you sell your property (whether your company is UK-incorporated or non-UK incorporated)

Penalties for late filing or payment

HMRC may charge penalties and interest if you:

• Do not file your return on time
• Do not pay on time
• Submit an inaccurate return

If you disagree with an HMRC decision about your return (such as a penalty), you may be able to appeal. You have 30 days from the date of the decision to send your appeal to HMRC.

Sources

• Annual Tax on Enveloped Dwellings: the basics

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