Annual Tax on Enveloped Dwellings 2025
Are you due to make an Annual Tax on Enveloped Dwellings (ATED) return by 30 April?
ATED returns for the year until 31 March 2026 must be filed and any tax paid by 30 April 2025.
ATED applies to residential property owned by non-natural persons including companies, a partnership with a corporate member or collective investment schemes (including unit trusts). The charge currently applies for properties worth £500,000 or more.
Those within the ATED rules are subject to an annual property tax based on the value of the property held.
The charge for the year until 31 March 2026 is based on the value of the property on 1 April 2022 (or on acquisition if later).
Chargeable amounts for 1 April 2025 to 31 March 2026
| Property value | Annual charge |
| More than £500,000 up to £1 million | £4,450 |
| More than £1 million up to £2 million | £9,150 |
| More than £2 million up to £5 million | £31,050 |
| More than £5 million up to £10 million | £72,700 |
| More than £10 million up to £20 million | £145,950 |
| More than £20 million | £292,350 |
Certain exemptions and reliefs from the ATED charge are available, including for bona fide property developers or investors letting to third parties. However, all claims for relief must be made in the return, either through a full ATED return or a simplified form known as a Relief Declaration Return.
The ATED return can be filed online from 1 April 2025.
A penalty regime exists for the late filing of ATED returns.
Valuation date and pre-banding check
For 2025/26 (and the following two years), the ATED charge is based on the value of the property on 1 April 2022 (or on acquisition if later).
Ideally, for residential properties owned before 1 April 2022, revaluations should have been carried out as close to this date as possible. The valuation must be based on the open market value of the property. Although a formal valuation is not strictly required, it is advisable to use a property professional to ensure that the figure is robust and reasonable. HMRC guidance also confirms that the valuation must be a specific amount rather than a ‘within a range of’ type valuation.
HMRC offers a pre-return banding check service to taxpayers. This can be applied for via an online form when taxpayers believe that the relevant property value is within 10% of a banding threshold. HMRC will typically reply within a 30-day period confirming whether they agree with the valuation. It is therefore advisable to submit the pre-return banding check as early as possible.
One to Many Campaign
It should be noted that there is increased scrutiny from HMRC on ATED returns and as part of this stricter approach, HMRC has recently started to issue letters to companies under a “One to Many campaign”. For example, for companies claiming rental relief exemption, the letter requests companies to provide evidence that they are a qualifying property rental business; renting to a 3rd party tenant is not necessarily sufficient as HMRC is now delving more deeply into whether the company may not be run on a ‘commercial basis’ and ‘with a view to profit’, especially if some losses have been made historically.
If you have any queries or require assistance with your ATED filings, please speak to Caroline Fleet or your usual Crowe Tax Advisor.
