Changes to ATED affecting overseas companies in the UK
In his Autumn Statement, the UK Chancellor announced further changes in respect of the
Annual Tax on Enveloped Dwellings (ATED), which may affect overseas companies owning
UK residential property.
Proposed increase in rates for the Annual Tax on Enveloped Dwellings (ATED) Significant increases have been announced to the rates of ATED applying from April 2015 to residential dwellings owned by companies and valued at over £2m. Instead of increasing by inflation as originally announced, they will increase by 50% plus inflation as set out below:
Property value Rates 2014/15 Rates 2015/16
More than £2m up to £5m £15,400 £23,350
More than £5m up to £10m £35,900 £54,450
More than £10m up to £20m £71,850 £109,050
More than £20m £143,750 £218,200
The increases in rates are significant.
The ATED has produced significant revenue for the UK Government. Although it was originally introduced in order to incentivise the de-enveloping of properties, in practice it appears to be a ‘tax raiser’ rather than a ‘behaviour changer’, and the Government is seeking to take advantage of the reluctance to de-envelope.
It has already been announced that the threshold at which ATED will apply from April 2015 will be reduced to include properties valued at more than £1m (the threshold will reduce further to £500,000 from April 2016). The £1m threshold will attract an ATED charge of £7,000 (£3,500 from April 2016 for properties exceeding £500,000). No changes have been announced to these rates.
For more information, contact:
Smith & Williamson, UK
T +44 20 7131 4395