Annual Tax on Enveloped Dwellings (ATED)
ATED Explained: Annual Tax on Enveloped Dwellings for UK Property Investors
If you're investing in UK residential property through a company or LLP, it's essential to understand the Annual Tax on Enveloped Dwellings (ATED). This UK property tax applies when residential properties are owned by a company or similar structure and valued over £500,000.
This guide explains how ATED works, who it affects, and how investors can avoid unnecessary tax through smart structuring and use of reliefs.
What Is ATED?
ATED is an annual tax charged on UK residential property owned by a non-natural person, including:
- Limited companies
- LLPs with corporate members
- Collective investment schemes
Does ATED Apply to LLPs?
Yes. If an LLP has a corporate partner and owns UK residential property worth over £500,000, it could fall within the ATED regime. Structuring LLPs carefully is essential to managing exposure.
ATED Threshold and Property Value
ATED only applies if a single residential property is valued at more than £500,000. Multiple properties each worth less than £500,000 do not trigger the tax.
ATED Rates for 2024–2025
| Property Value | Annual ATED Charge |
|---|---|
| £500,001 to £1 million | £4,400 |
| £1 million to– £2 million | £9,000 |
| £2 million to £5 million | £30,550 |
| £5 million to £10 million | £71,500 |
| £10 million to £20 million | £143,550 |
| Over £20 million | £287,500 |
ATED Reliefs and Exemptions
Common ATED reliefs include:
- Commercially let property
- Property held for development or resale
- Employee accommodation
- Property rental businesses
Even if relief applies, an ATED return must still be submitted annually.
ATED Deadlines
- Returns must be filed by 30 April annually
- Payments are also due by 30 April
- Penalties apply for late filing, even if no tax is due
How We Help Investors Avoid ATED
We will always structure property LLPs to stay under the ATED threshold and claim full reliefs where needed. Our Business model takes into account the ATED threshold values and we never exceed these. That said our team handles HMRC registration, annual returns, and compliance, so you can invest with confidence.
Frequently Asked Questions
Is ATED payable if I own more than one property under £500,000 each?
No. ATED is charged per property. If each property is under £500,000, no ATED is due.
Does ATED apply to LLPs?
Yes, if the LLP has a corporate partner and owns property over £500,000 in value. As our properties are always below this threshold and in any event are rented, it does not apply to Solid Yields Ltd.
Can I avoid ATED by letting the property?
Yes commercially let properties usually qualify for full relief. You must still submit a relief return.
What happens if I don’t file an ATED return?
You may face HMRC penalties, even if no tax is due. Returns are mandatory if the property is within scope.
How do I know the value of my property for ATED?
Use the property's value on 1 April 2022 or the purchase date. The next revaluation is due 1 April 2027.
If my property increases in value above £500,000, does ATED apply?
Not until the next valuation date, unless the property is sold or restructured.
Do I need to register with HMRC for ATED?
Yes, if your structure falls within the rules. Registration and filing are done online through HMRC.
What types of property are exempt from ATED?
Non-residential, development, employee housing, and charitable housing may be exempt but are subject to relief rules.
Can a property investment company avoid ATED?
Yes, through proper structuring, keeping values under threshold, and claiming applicable reliefs.
Disclaimer
This information is provided for general guidance only and does not constitute legal or tax advice. Please consult a qualified UK tax advisor for personalised advice.
