United Kingdom


  • Industry: Government & Public Sector, Social Housing
  • Type: Business and industry issue
  • Date: 07/05/2013

Impact of new rules on taxing high value residential properties  


From 1 April 2013 a new tax was introduced on individual residential properties worth over £2m which are owned by companies, some partnerships and other corporate vehicles. If the property is within the scope of the “Annual Tax on Enveloped Dwellings” (ATED) then an annual charge of between £15,400 and £143,750 could apply.


Following the Budget 2014, from April 2015 the charge will be extended to residential properties worth over £1m, and from April 2016 the charge will be extended to properties worth over £500,000.

Why were these measures introduced?


The tax is part of a series of measures aimed at discouraging people from holding their high-value UK residences through companies (often overseas companies) and encouraging such ownership to be held by the individuals directly.


Who will be affected?


Any company or corporate entity which owns a single dwelling with a value of more than £2m. This impacts mainly mansions, country estates or residences in prime locations – particularly areas of London. If a company owns a number of properties with a total value of more than £2m then the rules do not apply if each single dwelling is worth less than £2m.


Who will not be affected?


Companies which carry on genuine property businesses; companies which hold portfolios with an aggregate value of more than £2m where no single dwelling is worth more than £2m; companies owning certain types of properties which are not classed as “dwellings”.


What is a dwelling?


For the purposes of these rules a building or part of a building counts as a dwelling at any time when it is either used or suitable for use as a single dwelling, or it is in the process of being constructed or adapted for such use.


Properties held by social housing providers are outside the scope of the charge unless any single dwelling is worth more than £2m. 


Do you need to file a return?


Properties held by social housing providers and development companies within their groups have so far been outside the scope of the ATED charge, unless a single dwelling has a value in excess of £2 million. However the reduced thresholds will mean it is likely that residential properties held by both social housing providers and their development companies could fall within the scope of ATED in the future. Although they should be able to benefit from reliefs they will certainly have filing obligations going forward in order to claim these reliefs.


If Registered Providers or their development companies own any single dwellings with a value of more than £500,000 from 1 April 2016 they will need to complete an ATED return for each property over the threshold. There will also be a requirement to file returns at the point of completion on all newly-built homes over £500,000. HM Revenue & Customs (HMRC) do however permit one return per company where multiple properties are held and the same relief is being claimed.


Should a return be required for the 2014/2015 chargeable period, this must be filed by 30 April 2014.


Next steps


If you believe you do have any properties which may be subject to the charge, or are concerned about your obligation to correspond with HMRC, please contact us.


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Kathryn Mallett

Senior Manager, Social Housing

01293 652743



Simon Robinson

Senior Manager, Social Housing

0117 905 4369



Adrian Wills

Senior Manager, Social Housing

0161 246 4545



Pauline Hudd

Senior Manager, Stamp Taxes

0117 905 4538



Neil Whitworth

Senior Manager, Stamp Taxes

0161 246 4276