2021 ATED reminder

Companies with Residential Property – ATED Filing Reminder – Potential 30 April 2021 Filing Deadline

This is a reminder that if your company owns any residential properties, you should review your position now to decide if your company has a filing requirement with HMRC for Annual Tax on Enveloped Dwellings (ATED).  Failure to make even a “nil” return for ATED, including if you are a property development or property letting company, can mean that your company could be hit with late filing penalties of up to £1,600.

As a company, if on 1 April 2021 you hold a residential property as trading stock or as a capital asset then you may need to make a return to HMRC within 30 days i.e. no later than 30 April 2021. Further filing deadlines may occur if you acquire or convert properties during the year.

ATED Deadlines for 2021/22 tax year

30 April 2021 If your property is within the scope of ATED on 1 April 2021
30 days of acquisition If you acquire a property within the scope of ATED after 1 April 2021
90 days for newly built properties If you are a property developer with a newly completed dwelling, then your filing deadline for an ATED return is 90 days from the date the property is classed as a dwelling for Council Tax purposes or the date it is first occupied, whichever is earliest.

A property will be within the scope of ATED if its value, as of 1 April 2017 or at date of acquisition if later, is over £500,000. A formal property valuation is not required but you should be reasonably comfortable with your estimate.

Any company, partnership with a corporate member or collective investment scheme that owns a UK residential dwelling valued over £500,000 may be required to submit an ATED return, even if no tax is due. There are a number of exemptions and reliefs available to reduce your liability under ATED. However even if you are claiming a “relief” you will still need to make a return to HMRC within the above time limits.

You should review if you have any obligation to pay ATED or claim relief. If you need to submit a return you can register with HMRC’s on-line service: www.gov.uk/guidance/register-for-the-annual-tax-on-enveloped-dwellings-online-service in good time. You will need a Government Gateway account. HMRC open the filing window on 1 April.

Our flow chart below will help you to decide whether you may need to make an ATED return and if you qualify for any relief or exemption.

Click here to access our ATED Return Flowchart

Recently HMRC have been sending ‘Nudge’ letters to taxpayers where they feel they may have a dwelling or residential property worth more than £500,000 that would fall within ATED. The letters encourage taxpayers to check their returns and correct any mistakes before HMRC take any further action.
If you have received a nudge letter we would recommend carefully reviewing your tax affairs and get advice on how best to respond to HMRC to address any errors or complexities in your particular circumstances.

Please see our recent blog here for more information on the ‘Nudge’ letters.

For further information contact Zoe Flanagan, Senior Tax Advisor, zflanagan@garbutt-elliott.co.uk