Annual Tax on Enveloped Dwellings: annual chargeable amounts
Published 5 December 2016
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Who is likely to be affected
Certain companies, partnerships with company members and collective investments schemes (collectively referred to as non-natural persons (NNPs)) which own residential property in the UK valued at more than £500,000 and which are not eligible for relief.
General description of the measure
The annual charge 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 as part of a package of measures to tackle tax avoidance.
It is an annual charge on NNPs which own 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 Statement announced that the 2017 to 2018 annual charges 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 from 1 April 2017.
Current law
Section 94 of Finance Act (FA) 2013 gives rise to ATED charges in respect of a chargeable interest (the property) held by 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
A Treasury Order stating the ATED charges for the 2017 to 2018 chargeable period which are increased in line with the September 2016 CPI, which was 1%.
The table below shows the annual charges amounts for the 2016 to 2017 chargeable period and the revised chargeable amounts for 2017 to 2018 chargeable period beginning on 1 April 2017.
| Property value | Annual chargeable amounts for the 2016 to 2017 chargeable period | Annual chargeable amounts for the 2017 to 2018 chargeable period |
|---|---|---|
| £500,001 to £1 million | £3,500 | £3,500 |
| £1,000,001 to £2 million | £7,000 | £7,050 |
| £2,000,001 to £5 million | £23,350 | £23,550 |
| £5,000,001 to £10 million | £54,450 | £54,950 |
| £10,000,001 to £20 million | £109,050 | £110,100 |
| £20,000,0001 and over | £218,200 | £220,350 |
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|---|
| - | 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 indirectly own property via NNPs.
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. This measure 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 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 processing systems are designed to accommodate tax changes. The change will not increase HMRC processing or compliance resource.
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 Telephone: 03000 200 3510 or email: [email protected].