Submit ATED tax return by 30 April or risk penalties, warns local accountants

West Midlands-based accountancy firm Prime Accountants has issued a warning that some property owners may be overlooking obligations sparked by increasing property value.

With fiscal drag pushing the value of property above the Annual Tax on Enveloped Dwellings (ATED) threshold, Paislei Godley, Director at Prime, highlights a potential compliance risk.

“Whenever a deadline approaches, we try to raise awareness that more people may be affected than they realise due to changing values and static thresholds.

“As well as those who have had property for some time and know their ATED obligations, it is important for any company or entity that has acquired UK residential property in the last 12 months to check if they need to make an ATED return.”

ATED is a tax charged on companies and entities that hold UK residential property and will generally apply to some collective investment schemes, UK and non-UK companies and partnerships with at least one corporate partner.

If a UK residential property is valued at more than £500,000, then it is subject to ATED.

The value of the property must be established every five years, with the current valuation date being the later of 1 April or the acquisition date.

Paislei said: “Fiscal drag has increased the likelihood that a newly acquired property will be subject to ATED, especially if you have purchased property in a high-value area like London.

“Even more locally, there are areas throughout the West Midlands that command property prices comfortably above the ATED threshold.”

With the 30 April deadline swiftly approaching, the firm is keen for property owners to review their position to ensure that all obligations are met.

An annual charge of £4,450 will be applied to properties valued between £500,000 and £1 million, with this amount rising in relation to the value of the property.

The maximum ATED charge is £292,350 for properties valued above £20 million.

“We are happy to help taxpayers understand their position so they do not face any HMRC penalties.

“A common pitfall is not understanding that even if reliefs apply to reduce the charge to nil you must still file an ATED return as reliefs must be claimed through it.

“You don’t want to get caught out in this administration burden and we can advise on how to stay compliant,” concluded Paislei.