The Annual Tax on Enveloped Dwellings (ATED) system imposes a potential tax charge on certain residential properties held within some corporate structures. The system includes a mandatory five-year valuation review cycle where properties held at review dates need to be revalued to determine the rate of ATED, if any, which is due. The latest revaluation date is 1 April 2022, and this will affect the ATED charge for the year ended 31 March 2024, returns for which will need to be submitted by 30 April 2023.
This may sound like a long way off, but it is good practice to revisit valuations as close as possible to the April 20022 date, so that you have a contemporary record, as well as being prepared for likely future charges. If your organisation last looked at its properties in April 2017, it may be a useful start to know the general increase in values in your area since then, but you will need to look at each property individually, taking account of any improvements made during the period, and determine a specific valuation, not merely a range within which it might fall.
There is no obligation for you to have a formal valuation prepared by an independent valuer so you could gauge the value yourself using your knowledge of the property and its surrounds. You should keep a record of the basis of the valuation as evidence that either your property is below the minimum level or to substantiate the banding of the property.
An important reason to maintain records is that HMRC can challenge that value if they do not consider that it is a reasonable reflection of market value. If a challenge is successful, you may be subject to penalties as well as additional ATED charges. If you are in doubt and within 10% of a banding limit, you can ask HMRC for a Pre-Return Banding Check (PRBC).
For more information on ATED, including exemptions and reliefs, see our general guide here.
UKHPI figures from https://landregistry.gov.uk
Lovewell Blake are on hand to provide additional assistance with your business valuations.
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