Annual Tax on Enveloped Dwellings

Key facts

ATED applies to UK residential properties valued at over £500,000 held by companies, partnerships with company members, and collective investment schemes.
The annual charge ranges from £4,400 to £287,600 depending on the property’s value band (2025/26 rates).
Reliefs are available for property let commercially, held for development, or used for a qualifying trade.
An ATED return must be filed by 30 April at the start of each chargeable period (or within 30 days of acquisition).
ATED was introduced in 2013 to discourage “enveloping” — holding residential property in a corporate wrapper to avoid Stamp Duty and CGT.

How ATED Taxes Company-Owned Residential Property

The Annual Tax on Enveloped Dwellings (ATED) is a tax introduced in April 2013 that charges an annual flat-rate amount on UK residential properties held within a corporate “envelope” (a company or similar entity). The aim is to discourage the use of companies to hold high-value homes, which historically allowed owners to avoid Stamp Duty on sales and Inheritance Tax on death.^[1]

ATED applies to properties valued at more than £500,000 (the threshold was reduced from the original £2 million in stages between 2013 and 2016).

Who Pays ATED?

ATED is charged on “non-natural persons” (NNPs) that own UK residential property above the threshold. This includes:^[1]

Companies (UK and non-UK)
Partnerships where at least one member is a company
Collective investment schemes

It does not apply to individuals, even if they own very expensive properties. It also does not apply to registered charities or registered social landlords (housing associations).

Annual Charges by Value Band

The ATED charge is a fixed annual amount that increases with the property’s value. Rates are adjusted annually by CPI inflation. The charges for 2025/26 are:^[1]

Property Value	Annual Charge (2025/26)
£500,001 – £1,000,000	£4,400
£1,000,001 – £2,000,000	£9,000
£2,000,001 – £5,000,000	£31,050
£5,000,001 – £10,000,000	£72,700
£10,000,001 – £20,000,000	£145,950
Over £20,000,000	£287,600

Revaluation dates: Property values are based on the value at 1 April 2022 (or acquisition date if later). HMRC carries out revaluation exercises every 5 years, with the next revaluation date being 1 April 2027.^[1]

ATED Reliefs

Several reliefs can reduce or eliminate the ATED charge. However, even if a relief applies, you must still file an ATED return claiming the relief:^[2]

Relief	Conditions
Property rental business	Property is let commercially to an unconnected third party (not occupied by a connected person)
Property developers	Property acquired for development and sale in the ordinary course of a property development trade
Property traders	Property held as stock by a property trading company, with the sole purpose of resale
Financial institutions	Property acquired in the course of lending (e.g. repossession)
Employee accommodation	Property made available to employees (not shareholders or connected persons) for business purposes
Farmhouses	Farmhouse occupied by a qualifying farm worker and integral to the farming trade
Open to the public	Property open to the public for at least 28 days per year (e.g. stately homes)

Tip: The most commonly claimed relief is the property rental business relief. If your company genuinely lets the property at a commercial rent to a non-connected tenant, the ATED charge is eliminated — but you must still file the return each year to claim it.

Filing & Payment

The ATED chargeable period runs from 1 April to 31 March each year. Key dates:^[3]^[4]

Return filing deadline: 30 April at the start of the chargeable period (e.g. 30 April 2025 for the 2025/26 period)
Payment deadline: Also 30 April (the tax must be paid at the same time as the return is filed)
New acquisitions: If a property is acquired during the year, the return must be filed within 30 days of acquisition, with payment due within 30 days
Relief returns: Filed by the same deadline, even though no tax is payable

Late filing and late payment attract penalties and interest in line with HMRC’s standard regime. ATED is separate from Corporation Tax — the company must still report any rental profits on a CT600, which can be filed online.

Frequently Asked Questions

What is ATED and who has to pay it?

ATED is an annual tax on UK residential properties valued over £500,000 held by companies, partnerships with company members, or collective investment schemes. Individuals are not liable for ATED.

How much is the ATED charge?

The annual charge depends on the property’s value band, ranging from £4,400 for properties valued between £500,001 and £1,000,000 up to £287,600 for properties over £20,000,000 (2025/26 rates).

Can I claim relief from ATED if my company lets the property?

Yes. The property rental business relief eliminates the ATED charge if the property is let commercially to an unconnected third party. However, you must still file an ATED return each year to claim the relief.

When is the ATED return due?

ATED returns must be filed by 30 April at the start of each chargeable period (e.g. 30 April 2025 for the 2025/26 period). Payment is also due by the same date.

Sources

Annual Tax on Enveloped Dwellings: the basics — GOV.UK
ATED: reliefs, exemptions and mitigation — GOV.UK
Pay Annual Tax on Enveloped Dwellings — GOV.UK
ATED: filing and singling returns — GOV.UK

Annual Tax on Enveloped Dwellings (ATED)