Annual tax on enveloped dwellings: annual chargeable amounts
Published 22 November 2017
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This publication is available at https://www.gov.uk/government/publications/annual-tax-on-enveloped-dwellings-annual-chargeable-amounts-for-2018-to-2019/annual-tax-on-enveloped-dwellings-annual-chargeable-amounts
Who is likely to be affected
Companies, partnerships with any company members, and collective investment schemes (collectively referred to as non-natural persons (NNPs)), which own an interest in UK residential property valued at more than £500,000 and which are not eligible for relief.
General description of the measure
The annual chargeable amounts for the Annual Tax on Enveloped Dwellings (ATED) will be increased by inflation.
Policy objective
The ATED annual chargeable amounts are fixed charges as opposed to percentage charges. The annual charges are therefore increased annually to keep pace with inflation in line with rises in the Consumer Prices Index (CPI).
Background to the measure
ATED was introduced from 1 April 2013.
It is an annual charge on NNPs which own an interest in UK residential property valued at more than £500,000. The ATED chargeable period runs from 1 April to 31 March and the amount of tax charged is by reference to a banding system based on the value of the property. There are a number of reliefs where a property is used for commercial purposes.
Autumn Budget 2017 announced that the annual charges for the 2018 to 2019 chargeable period will be increased by CPI. This is to provide taxpayers with advance notice to plan their tax affairs.
Detailed proposal
Operative date
The new charges will apply to the 2018 to 2019 chargeable period, which begins on 1 April 2018.
Current law
Section 94 of Finance Act (FA) 2013 gives rise to an ATED charge in respect of a chargeable interest (UK residential property) held by a NNP.
Section 99 of FA 2013 details the amount chargeable by reference to various bands into which a property falls according to its value on a particular date.
Section 101 requires the charge to be increased annually by reference to the previous September CPI, and rounded down to the nearest £50. Section 101(5) requires a Treasury Order to be published stating the annual chargeable amounts before each 1 April.
Proposed revisions
Publication of a Treasury Order stating the ATED charges for the 2018 to 2019 chargeable period which are increased in line with the September 2017 CPI, which was 3%.
The table below shows the annual chargeable amounts for the 2017 to 2018 chargeable period and the revised chargeable amounts for 2018 to 2019 chargeable period which begins on 1 April 2018.
| Property Value | Annual chargeable amounts for the 2017 to 2018 chargeable period | Annual chargeable amounts for the 2018 to 2019 chargeable period |
|---|---|---|
| £500,001 to £1,000,000 | £3,500 | £3,600 |
| £1,000,001 to £2,000,000 | £7,050 | £7,250 |
| £2,000,001 to £5,000,000 | £23,550 | £24,250 |
| £5,000,001 to £10,000,000 | £54,950 | £56,550 |
| £10,000,001 to £20,000,000 | £110,100 | £113,400 |
| £20,000,0001 and over | £220,350 | £226,950 |
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| - | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
Individuals are not directly affected by this measure, except to the extent that those individuals own residential property via a company (a NNP).
This measure is not expected to have an impact on family formation, stability or breakdown.
Equalities impacts
This measure concerns the taxation of companies, corporate partnerships, and collective investments schemes falling within ATED. It is not expected to impact on any of the legally protected equality groups.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses. NNPs that will be affected by the increased charges will pay a higher annual charge and may incur a negligible one-off cost to update their systems. Those businesses holding UK residential property for genuine commercial reasons and who are eligible to claim full relief from the charge will be unaffected by these increases.
There are not expected to be any additional on-going costs. This measure is not expected to have any impact on civil society organisations.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other)
HMRC’s processing and IT systems are designed to accommodate this tax change. The change will not increase HMRC costs.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored and assessed through existing data-gathering systems and information collected from tax returns. It will be published as Official Statistics.
Further advice
If you have any questions about this change, please contact HMRC Helpline on 03000 200 3510 or email: [email protected].