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Our guide to ATED

What is ATED?

Annual Tax on Enveloped Dwellings (ATED) is an annual tax on UK residential properties worth more than £500,000 that are owned by companies or other organisations. The tax was introduced to discourage organisations from holding high-value UK residential property that could be sold without paying Stamp Duty Land Tax.

Who has to pay ATED?

Not every property attracts ATED. Some are exempt, while others qualify for tax relief.

Exempt properties include:

  • Hotels and guest houses
  • Care homes and hospitals
  • Boarding schools
  • Student accommodation
  • Military accommodation
  • Properties owned by charitable organisations

You may also qualify for tax relief if the property is:

  • Let to a third party on a commercial basis
  • Open to the public for at least 28 days a year
  • Being developed for resale by a property developer
  • Held as trading stock by a property trading company
  • Used by a business to provide living accommodation for certain qualifying employees
  • Occupied by a farm worker or a former long-serving farm worker

In most cases, tax relief can reduce the ATED charge to nil.

We can advise you on whether your property, or part of it, qualifies for relief. Even if no ATED is due, you may still need to submit an annual ATED return to HMRC to claim the relief. It’s important to meet the filing deadline, as penalties can apply even where no tax is payable.

How is ATED calculated?

The amount of ATED you pay depends on the value of the property and, for some properties, when it was bought.

If the property was bought before 1st April 2022, its value is based on what it was worth on 1st April 2022. If it was bought on or after 1st April 2022, its value is based on the purchase price.

From April 2026, the annual ATED charge ranges from £4,600 for properties worth between £500,000 and £1 million, up to £303,450 for properties worth £20 million or more. Go to our Property Valuation Guidance to view all ATED valuation bands.

How we can help

What our clients say…

“Thanks again for your help on this case – a very clear ATED exemption case with genuine third party letting but with the taxman threatening to withdraw that relief.”

Diane Dentith, Group Managing Director, Sovereign Group

“I welcome the final decision of HMRC and must say without your specialist knowledge in this field this may have become a nightmare for me. Thanks again for your kind help.”

Peter Cheok, CEO, Topsearch International

“Thank you very much for your assistance. HMRC accepted our appeal and accordingly have withdrawn the late filing penalty.”

Yumiko Asakura, Leaves Institute

If you’d like to know more about any of our specialist services, please contact us and we’ll be happy to help. You can call us on +44 20 7429 4141 or email enquiries@ated.co.uk.