Annual Tax on Enveloped Dwellings

The annual tax on enveloped dwellings (ATED) was introduced as part of a package of measures aimed at making it less attractive to hold high-value UK residential property indirectly, e.g. through a company, in order to avoid or minimise taxes such as stamp duty land tax (SDLT) on a subsequent disposal of the property.

The other measures included in the anti-avoidance package relating to high-value UK residential property include:
1. a higher 15% rate of SDLT on the acquisition of high-value UK residential property for non-natural persons (NNPs)
2. a capital gains tax (CGT) charge on sales of high-value UK residential property by NNPs (for further details
Since it was first introduced in 2013, the initial ATED qualifying property value of £2m has changed to £1m from 1 April 2015, and to £500,000 from 1 April 2016.

Valuations are the responsibility of the taxpayer and must be on an open market 'willing buyer, willing seller' basis. To demonstrate to HMRC that reasonable care has been taken, you must obtain at least one professional valuation. If your valuation is successfully challenged by HMRC, increased ATED charges, penalties, and late payment may be due.

If a property consists of several self-contained parts such as flats, each part is subject to an individual valuation. If the property is partly owned by a company and partly by an individual connected with the company, all parts are added and treated as one dwelling.