Last chance for ATED returns, unless..

04 March 2017

It is the final week for the completion of the Annual Tax on Enveloped Dwellings (ATED) return for the period between 1 April 2015 and 31 March 2016. Owners of residential property in the UK worth more than £2,000,000 as at 1 April 2012, or subsequently purchased for more than £2,000,000 and held via an envelope (including companies and partnerships with corporate partners), will be required to submit an annual return and pay any remaining tax due on or before the 30th April 2015, but only if there is an ATED charge to be paid.

There have been changes to both the threshold and compliance procedures for those claiming reliefs and different deadlines apply to those who fall in those categories.

£1,000,000 ATED Threshold

The threshold for the ATED charge has been reduced to £1,000,000 from 1 April 2015. Any UK residential properties held via an envelope with a value of £1,000,000 as at 1 April 2012 (or acquired for more than £1,000,000 after that date) will be subject to ATED for the first time. To soften the blow, transitional rules will apply this year to allow for those falling into ATED for the first time to get used to the new compliance procedures. Therefore, an ATED return must be filed by 1 October 2015 for properties valued between £1,000,000 and £2,000,000, and any tax due must be paid by the 31 October 2015.

Relief Declaration Return

There have also been major changes in the compliance process for those properties that qualify for a relief. The Relief Declaration Return (RDR) is designed to simplify the compliance process in instances where an envelope holds one or more properties which qualify for relief or reliefs. The RDR will only require details about the entity holding the property and the relief being claimed and not information regarding the individual properties. There will be a requirement to file a RDR for each type of relief being claimed so if there is property development and property rental business in the same company for example, a RDR will need to be filed for both. A separate return will be required in instances where the property in question ceases to qualify for the relief. If there are any mid year purchases which would qualify for a relief and an RDR has already been filed, no further return will now be needed.

Transitional rules also apply to the filing of any RDR return so the deadline to make RDR’s for the tax year 2015/16 is the 1 October 2015, for any newly acquired property the normal filing dates of 30 days from acquisition (if later) will apply. The actual RDR is not yet available from HMRC, which have promised it will be made available with ‘plenty’ of time to spare before the filing requirement.

Penalties

It is also important to remember that failure to pay the ATED charge on time or file any returns (including those claiming relief) will lead to penalties being levied by HMRC. Failure to pay on time can lead to penalties up to 15% of the charge due and failure to file a return, even when there is no tax to pay can quickly lead to penalties of £1,000 per return (starting at £100 per return if you are just one day late). There can also be tax geared penalties in the circumstances where the return is late and there is tax to pay so extreme care must be taken to ensure compliance with the rules.
 
In summary for properties held at the start of the year:

  • If you have a property worth more than £2m and an ATED charge is due, you have to file your return and pay the charge by 30 April 2015.
  • If you have a property worth more than £1m and an ATED charge is due, you have to file your return by 1 October 2015 and pay any tax due by 31 October 2015.
  • If you have a property which qualifies for a relief, you have to file an RDR by 1 October 2015.

For assistance with filing your ATED return or to discuss your specific circumstances, please contact your local tax partner or email your enquiry to us.

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