UK resident landlords | Annual Tax on Enveloped Dwellings

Annual Tax on Enveloped Dwellings

You must read this if you own property through a company.

ATED (Annual Tax on Enveloped Dwellings) for UK resident landlords – you must read this if you own property through a company

Tax returns for the UK property landlord. Making UK tax easy for property owners. Whether you are a UK landlord or a non-resident landlord, Landlords Tax Services provide a complete property tax service which ensures your UK tax affairs are dealt with on time and worry-free. We do it all online and for a fixed fee. No surprises. No stress. Landlords Tax Services offer the easy, professional way to deal with the UK tax obligations of landlords. UK property tax laws are ever-changing and, with more and more people becoming investors and landlords of properties in the UK, Landlords Tax Services have created an easy to use service aimed at providing new or experienced landlords with an efficient system to fulfil their UK property tax needs. Tax Returns for landlords of UK property: the complete tax service for residential property landlords. Our UK based landlord tax accountants can help you comply with UK property tax laws wherever you are in the world. We provide an online, fixed fee property tax service that ensures that the UK tax liability of landlords is kept to a minimum. Our mission is to deal with all our clients’ tax affairs on time and with no stress.

Owners of UK rental property who live outside the UK are obliged to register for UK taxes whether any tax is due or not. The UK has Tax Treaties with over 130 other countries. These treaties generally include sections designed to prevent the same income being taxed twice. Usually the UK will tax UK rental income first and the other country will allow you to deduct the UK tax from the local tax up to an amount equal to the local tax. Tax returns for the UK property landlord. British and EEA citizens living anywhere in the world, along with many other people living in the country of which they are citizens, are entitled to the UK “Personal Allowance”, a £NIL band rate that means the first £12,570 of profit from rental may be free of tax in the UK, and profits between £12,570 and £50,270 are taxed at 20%. Higher rates apply to UK income in excess of £50,270 (2021-22 rates).

ATED (Annual Tax on Enveloped Dwellings) for UK resident landlords – you must read this if you own property through a company

What is an ‘enveloped dwelling’?

Most residential properties (dwellings) are owned directly by individuals. But in some cases a dwelling may be owned by a company, a partnership with a corporate member or other collective investment vehicle. In these circumstances the dwelling is said to be ‘enveloped’ because the ownership sits within a corporate ‘wrapper’ or ‘envelope’. What follows applies equally to UK companies and overseas companies partnerships and some trusts and does not apply to individuals.

ATED (Annual Tax on Enveloped Dwellings) for UK resident landlords

What is the Annual Tax on Enveloped Dwellings (ATED)?

ATED is the Annual Tax on Enveloped Dwellings and applies to all companies owning UK property. From April 2018 the threshold is £500,000 as at 5th April 2017.

The current tax rates can be found on our tax rates page.

Currently there is relief given where the property is let commercially, however this relief is not automatic, it has to be claimed on the annual ATED Relief Declaration — lettings. To complete the Return we will need a new agent authorisation, and you will need to establish the value of the property as at 5th April 2017, and then every fifth year thereafter, though you do not need a professional valuation.

The relief from ATED may reduce the ATED tax payable to zero, however there are still penalties for failing to submit a Return on time or for using an incorrect valuation.

ATED (Annual Tax on Enveloped Dwellings) for UK resident landlords

Currently the relief for a let property is 100%. This may not always be the case.

Similarly if you or a member of your family ever stays in the property, even for one night you lose the relief not only for that year but may also lose the relief for other years as well.

Please remember too that in a spirit of openness and cooperation, most national tax agencies (including HMRC) now share tax data. You can find more information on the HMRC website.

ATED (Annual Tax on Enveloped Dwellings) for UK resident landlords

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