Annual tax on enveloped dwellings (ATED)—the basics

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Annual tax on enveloped dwellings (ATED)—the basics
  • What is the annual tax on enveloped dwellings?
  • When does ATED apply?
  • General defined terms
  • Chargeable interest
  • Chargeable period
  • Single-dwelling interest
  • Non-natural persons and the ownership condition
  • Taxable value and valuation date
  • Who is liable to pay ATED?
  • More...

Annual tax on enveloped dwellings (ATED)—the basics

What is the annual tax on enveloped dwellings?

The annual tax on enveloped dwellings (ATED) was introduced as part of a package of measures aimed at making it less attractive to hold high-value UK residential property indirectly, eg through a company, in order to avoid or minimise taxes such as stamp duty land tax (SDLT) on a subsequent disposal of the property.

The other measures included in the anti-avoidance package relating to high-value UK residential property include:

  1. a 15% rate of SDLT on the acquisition of high-value UK residential property for non-natural persons (NNPs) (for further details, see Practice Notes: Rates of SDLT and 15% rate of SDLT for high-value residential property transactions), and

  2. a capital gains tax (CGT) charge on sales of high-value UK residential property by NNPs (abolished from 6 April 2019 (for further details, see Practice Note: Capital gains tax charge on ATED-related gains [Archived]))

When does ATED apply?

The provisions enacting ATED are set out in Part 3 of the Finance Act 2013 (FA 2013). ATED applies to high-value UK residential property owned on, or acquired after, 1 April 2013, by NNPs. ATED is an annual tax and is charged in respect of chargeable periods running from 1 April to 31 March (the 'chargeable period') starting with the period 1 April 2013 to 31 March 2014.

ATED applies where

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