How does ATED work for residential property held in a company?
Answered 11 March 2026
How ATED Works for Residential Property Held in a Company
What the law says
The charge to tax
ATED is established under Part 3 of Finance Act 2013. The charge arises where, on one or more days in a chargeable period, a "single-dwelling interest" has a taxable value of more than £500,000 and a company meets the ownership condition with respect to that interest. A company meets the ownership condition on any day on which it is entitled to the interest (otherwise than as a member of a partnership or for the purposes of a collective investment scheme).
Chargeable periods
The chargeable periods run annually from 1 April, beginning with the period 1 April 2013 to 31 March 2014. ATED is charged by reference to the number of days in the chargeable period on which the relevant conditions are satisfied.
Tax rates (as amended)
The annual chargeable amounts (as substituted for periods from 1 April 2015) are set out in the table in FA 2013 s.99(4):
| Annual charge | Property value band |
|---|---|
| £3,500 | More than £500,000 but not more than £1 million |
| £7,000 | More than £1 million but not more than £2 million |
| £23,350 | More than £2 million but not more than £5 million |
| £54,450 | More than £5 million but not more than £10 million |
| £109,050 | More than £10 million but not more than £20 million |
| £218,200 | More than £20 million |
The threshold was progressively reduced: from £2 million (original) to £1 million from 1 April 2015, and then to £500,000 from 1 April 2016.
Returns
A company within the charge must deliver an ATED return under FA 2013 s.159. For standard cases, the return is due by 30 April in the chargeable period. A "relief declaration return" is available where a relief applies, which need not identify the specific property.
ATED-related CGT on disposal
Where a company disposes of a residential property that has been subject to ATED, an ATED-related CGT charge arises on "relevant high value disposals." The normal rule charging companies' gains to corporation tax is disapplied for ATED-related gains (TCGA 1992 s.1(2A) and s.8(4A)). The computational rules are set out in TCGA 1992 Sch 4ZZA.
HMRC guidance / practice
Policy background
ATED was introduced as part of a Budget 2012 package specifically to counter "enveloping" — the practice of holding high-value UK residential property in a corporate vehicle so that effective ownership could be transferred by selling shares rather than the property itself, thereby avoiding SDLT. The package comprised three interlocking measures: a 15% SDLT rate on enveloped acquisitions, the annual ATED charge, and ATED-related CGT on disposal.
How the charge operates day-by-day
ATED is chargeable for any day (from 1 April 2013) when the value of the single-dwelling interest exceeds the relevant threshold. Days are not chargeable if a relief applies. For example, if a company holds a property for the whole year but 200 of the 365 days are "relievable days," the company is charged only 165/365 of the annual chargeable amount.
Main reliefs
The main reliefs from ATED are broadly where the property is:
- In use for the purposes of a property rental business run commercially with a view to profit (subject to exceptions, e.g. occupation by a connected person);
- Held as trading stock of a property development or trading business (subject to exceptions);
- Open to the public for at least 28 days a year as part of a commercial trade;
- Repossessed by a mortgage lender;
- A farmhouse, subject to conditions;
- Held by a charity for its charitable purposes;
- Held by a registered social housing provider for qualifying purposes.
ATED-related CGT
ATED is payable yearly by the company for any high-value UK residential property it owns, at a rate determined by the value of the property. ATED-related CGT then applies to gains accruing on disposal of such properties, to the extent that ATED has been paid on them. Where both ATED-related CGT and non-resident CGT could apply (e.g. for overseas companies), the ATED-related CGT charge takes precedence.
Citation sources
PART 2 Excise duties and other taxes Stamp duty land tax and annual tax on enveloped dwellings ATED: further reduction in threshold from 1 April 2016 110 1 Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows. 2 In section 94(2)(a) (charge to tax), for “£1 million” substitute “ £500,000 ” . 3 In section 99 (amount of tax chargeable), in the table in subsection (4), before the first entry insert— £3,500 More than £500,000 but not more than £1 million. 4 The amendments made
PART 2 Excise duties and other taxes Annual tax on enveloped dwellings ATED: returns 73 1 Part 3 of FA 2013 (annual tax on enveloped dwellings) is amended as follows. 2 In section 159 (annual tax on enveloped dwellings return), after subsection (3) insert— 3A Where a person— a would (apart from this subsection) be required in accordance with subsection (2) to deliver a return for a chargeable period (“the later period”) by 30 April in that period, and b is also required in accordance with subsec
eated as a separate chargeable interest. The charge to ATED (and any reliefs available) applies by reference to each separate interest, called a ‘single-dwelling interest’. ATED is chargeable for any day (from 1 April 2013) when the value of the ‘single-dwelling interest’ exceeds the relevant amount for the year. But days are not chargeable if any of the reliefs from ATED apply. If, for example, a company has a ‘single-dwelling interest’ for the whole of the year to 31 March 2014 and 200 of the
Introduction 1. This is an appeal against a decision of the First-tier Tribunal (Tax Chamber) (“the FTT”) released on 18 March 2024. It concerns the Appellant’s liabilities to stamp duty land tax (“SDLT”) at the higher rate for high-value residential transactions and to the annual tax on enveloped dwellings (“ATED”). The FTT held that the Appellant was liable to both, and confirmed an assessment to SDLT in the sum of £372,000 and assessments to ATED for periods ending 31 March 2015, 2018 and 202
At Budget 2012 the Government announced a package of measures to counter arrangements to avoid tax by “enveloping” high value residential property in the UK. An example of the sort of arrangements targeted is: A wealthy individual Z is resident, but not domiciled, in the UK and is chargeable on the remittance basis (see CG25313+). Z owns 100% of the shares in Company Y, which is not UK resident. Z arranges for company Y to buy a residential property in London for £5 million. Company Y has no oth
‘ATED-related CGT’ was introduced in 2013 alongside the income tax charge ‘ATED’ - Annual Tax on Enveloped Dwellings. As explained in CG73600, the two taxes were introduced primarily to discourage the ‘enveloping’ of UK residential property in a corporate entity to avoid Stamp Duty Land Tax. Effective ownership of properties could be transferred without SDLT being incurred, because the asset sold would be an interest in the entity and not the property itself. ATED is payable yearly by the envelo
TCGA92/S2B imposes a charge to capital gains tax (CGT) on persons who realise gains that are ATED-related (see CG73625+) on ‘relevant high value disposals’ (see CG73616+) of residential property in the UK. The ATED related CGT charge applies to disposals in the period 6 April 2013 to 5 April 2019. The range of persons within the scope of the charge is different from the normal scope of CGT it includes: Companies. The normal rule charging companies’ chargeable gains to corporation tax instead of