Understanding ATED: Reliefs, Exemptions, and Claiming Procedures
Introduction
The Annual Tax on Enveloped Dwellings (ATED) imposes a tax on UK residential properties owned by companies. However, there are reliefs and exemptions available that can either eliminate or reduce the amount of ATED payable. In this blog post, we will explore the various reliefs and exemptions that property owners may claim and provide guidance on how to claim them.
Reliefs for ATED
Property owners may be eligible for relief from ATED under certain circumstances. These reliefs can either exempt the property from ATED entirely or reduce the amount of tax payable. Here are some of the reliefs that can be claimed:
Commercial Letting Relief: If the property is let to a third party on a commercial basis and is never occupied by anyone connected with the owner, relief may be claimed.
Public Access Relief: If the property is open to the public for a minimum of 28 days per year, relief may be available.
Property Developer Relief: Relief can be claimed if the property is being developed for resale by a property developer.
Property Trader Relief: If the property is owned by a property trader and is considered part of the business stock for the sole purpose of resale, relief may be claimed.
Financial Institution Relief: Repossessed properties acquired by financial institutions as a result of their lending business can be eligible for relief.
Regulated Home Reversion Plan Relief: Relief may be claimed for properties acquired under a regulated home reversion plan.
Trading Business Accommodation Relief: Properties used by a trading business to provide living accommodation to qualifying employees can be eligible for relief.
Farmhouse Relief: Farmhouses occupied by farm workers or former long-serving farm workers may qualify for relief.
Social Housing Relief: Properties owned by registered providers of social housing or qualifying housing co-operatives can be eligible for relief.
For more information on these reliefs and the conditions to meet, refer to sections 30 to 41 of the ATED technical guidance.
Homes for Ukraine Sponsorship Scheme and ATED Relief
Reliefs from ATED may be impacted if a residential property is used to house people as part of the Homes for Ukraine sponsorship scheme. However, as of April 1, 2022, the following reliefs will continue to be available while a property is being used under the Homes for Ukraine sponsorship scheme:
Property Rental Business Relief
Property Developer Relief
Property Trader Relief
Refer to section 41A of the ATED technical guidance for complete details.
Claiming Reliefs
To claim relief, property owners should utilize the ATED online service. If the relief claim reduces the ATED charge to zero, a Relief Declaration Return must be submitted through the online service.
In situations where the online service cannot be used, property owners can request an ATED or Relief Declaration paper return by emailing paperforms.ated@hmrc.gov.uk. The Returns Notice provides information on what should be included in the email and where to send the paper return.
Exemptions
If property owners meet the conditions for an exemption, they are not required to file an ATED return. The following exemptions are available:
Charitable Companies: Exemption is granted to charitable companies using the dwelling for charitable purposes. All exemption conditions must be met as outlined in section 42 of the ATED technical guidance.
Public Bodies: Certain public bodies listed in section 43 of the ATED technical guidance are exempt.
Bodies Established for National Purposes: Exemption is available for bodies established for national purposes listed in section 44 of the ATED technical guidance.
Conclusion
Understanding the reliefs and exemptions available under ATED is crucial for property owners in the UK. By exploring and claiming the appropriate reliefs, property owners can either eliminate or reduce their ATED tax obligations. It is recommended to consult the ATED technical guidance or seek advice from a tax professional for detailed guidance tailored to individual circumstances.
