The UK Government has announced an extension to the recently introduced Annual Tax on Enveloped Dwellings (ATED) regime, which applies when UK residential properties are owned by companies or partnerships with a corporate member. The changes mean that ATED will be charged on houses of only twice the national average value from 2016.
As of midnight on 19 March 2014, any new purchase of a UK residential property by such entities will be subject to 15% SDLT if the purchase price is more than £500,000.
In addition to this, two new bands will be introduced to the ATED regime, which will bring properties with a lower value into the scope of the charges. Residential properties worth over £1 million and up to £2 million will be brought into the charge with effect from 1 April 2015 with an annual £7,000 charge applying. Properties worth over £500,000 and up to £1 million will be brought into the charge with effect from 1 April 2016 with an annual £3,500 charge. The annual charge for each of these new bands will increase in line with the Consumer Price Index, as with the existing bands. The ATED-related capital gains tax charge will also apply to properties in the new ATED bands.
Once the regime is fully introduced, the bands will be:
| Property value | Annual tax applying (excluding indexed increase) |
| Over £500,000 to £1 million | £3,500 |
| Over £1 million to £2 million | £7,000 |
| Over £2 million to £5 million | £15,000 |
| Over £5 million to £10 million | £35,000 |
| Over £10 million to £20 million | £70,000 |
| Over £20 million | £140,000 |
It remains unclear what the relevant valuation date will be. For example, if the valuation date is unchanged from the existing regime it will mean that any property that was within those bands on 1 April 2012 will be within the scope of the charge already, unless the position changes by the above dates. Alternatively, they may bring in separate valuation dates for each of the new bands. In any event, any companies that hold a UK residential property are likely to require attention in the near future, even if the values are relatively low. Further information as to the details will be in the draft Finance Bill 2015.