2 min read ATED

What Is the Annual Tax on Enveloped Dwellings (ATED)?

ATED applies to residential property in the UK owned by companies. Annual charges, reliefs, and how to file your ATED return with HMRC.
What Is the Annual Tax on Enveloped Dwellings (ATED)?

The Annual Tax on Enveloped Dwellings (ATED) is a tax that applies to residential properties in the UK owned by non-natural persons — typically companies, partnerships with corporate members, and collective investment schemes. Introduced in 2013, ATED is charged annually and can be a significant cost for property-holding companies that do not qualify for a relief.

Who Pays ATED?

ATED applies to any non-natural person owning UK residential property valued at more than £500,000. This includes UK and non-UK companies, LLPs with at least one corporate member, collective investment schemes, and similar entities. Individual owners, including trustees of certain trusts, do not pay ATED.

ATED Charges for 2025/26

The charge is banded by property value: properties worth over £500,000 to £1 million: £4,400 per year; over £1 million to £2 million: £9,000; over £2 million to £5 million: £30,550; over £5 million to £10 million: £71,500; over £10 million to £20 million: £143,550; over £20 million: £287,500. These figures are index-linked and updated annually.

Reliefs from ATED

ATED reliefs are extensive and cover most commercial property-holding situations. Key reliefs include: property rental businesses (let at arm's length to unconnected tenants); property developers (developing and selling residential property); property traders (buying and selling with no occupation between); farmhouses genuinely occupied by a working farmer; public body ownership; charitable ownership for charitable purposes; social housing. Most reliefs require an ATED relief return to be filed even if no tax is due — you cannot simply ignore ATED because you qualify for a relief.

Filing and Payment

ATED returns for each chargeable period (1 April to 31 March) must be filed and any tax paid by 30 April at the start of the period. Late filing penalties and interest apply on late payments. Returns are filed online through HMRC's ATED digital service.

Valuation

The property value used for ATED is the higher of: the market value on 1 April 2012 (or acquisition date if later), or the value at the most recent revaluation date. HMRC requires revaluations every 5 years. The last revaluation date was 1 April 2022 — values at that date apply for the periods 2023/24 through 2027/28.

ATED and Capital Gains Tax

Properties subject to ATED are also subject to the ATED-related Capital Gains Tax charge, which applies to gains arising during periods when ATED was charged. This interacts with the standard CGT on residential property — specialist advice is recommended for property companies contemplating disposal.

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