Corporate Property Ownership Tax Return: Filing, Deadlines, and Reliefs
Company ownership of UK residential property comes with some additional tax responsibilities. The most important among them is the Annual Tax on Enveloped Dwellings (ATED) and it applies to companies, corporate member partnerships, and some collective investment schemes. If your company has residential property of over £500,000, you may be required to file ATED return annually with HMRC.
Understanding when and how to file this return is necessary in order to avoid unnecessary penalties and have your business make use of available reliefs.
When Is an ATED Return Required?
The ATED regime applies to businesses that have residential property in the UK worth more than £500,000. The threshold is based on the market value at a time or on purchase. The return must be made even if there is no tax payable since there is a relief.
Filing deadline is 30 April of each year and for 12 months from 1 April. Failure to file on this date will result in automatic penalties irrespective of whether you owe tax or not.
How to File an ATED Return
Filing involves providing details of the property, the ownership structure, the valuation, and the reliefs that you are claiming. Companies can file the return online via the HMRC ATED portal. Where a property qualifies for relief, for instance, it’s being used for letting on a commercial basis to third parties or is held as trading stock by a property developer, the relief must be specifically claimed within the return.
You will also need to maintain proper documentation, including results of recent valuations and evidence of how the property is being used. For example, if you’re claiming a rental business relief, tenancy records and lease agreements should be made ready to support your claim.
ATED Charges and Reliefs
ATED amount payable is determined by which value band the property falls in. As the property value increases, so do the charges, so valuation becomes significant. There are, nevertheless, several reliefs that will reduce or eliminate your liability, including:
- Letting of property to unrelated third parties
- Property trading or development businesses
- Dwellings open to the public or held for the provision of employee accommodation
Even if your property is eligible for full relief, you’ll still have to submit ATED return claiming the relief to prevent a penalty.
Common Errors to Be Avoided
A usual mistake is to assume no return needs to be filed if there is no tax payable. In fact, the return is compulsory, and its neglect can invite penalties. The other common mistake is using outdated property valuations, which can lead to underpayment or overpayment of tax.
Plus, most companies get it wrong when it comes to claiming reliefs or keeping enough records to support their claims. These mistakes can attract HMRC inquiries or result in relief claims being rejected.
Tying Up Your ATED Affairs
To stay compliant, plan ahead. Revalue your properties from time to time and note key ATED deadlines in your calendar. If your company structure or purposes of properties change, re-assess your filing obligations and potential reliefs.
ATED can be complicated to navigate, particularly where there are several properties or where relief eligibility is uncertain. That’s where specialists like UK Property Accountants offer such valuable support. With their in-depth knowledge of corporate property taxation, they guide clients through the process of submitting accurate returns and claiming all the relief they’re eligible for.
