ATED revaluation date reminder for farms and estates

Farm and estate businesses holding residential property in a company and liable for the Annual Tax on Enveloped Dwellings (ATED) will need a revised valuation of any dwellings for their April 2023 returns.

ATED is the tax which applies to all companies which own an interest in a UK dwelling worth more than £500,000.

The annual tax payable is calculated based on a valuation of the property at fixed revaluation dates, set by HMRC, which occur every five years.

There are a number of available reliefs and exemptions, but all non-relievable property needs to have been revalued as at 1 April 2022 to establish what the annual ATED charge will be for the April 2023 return.

This revaluation figure will then be used on subsequent returns until the next revaluation date in five years’ time.

Several reliefs of up to 100% are available, including for residential property let to third parties on a commercial basis and dwellings occupied by farmworkers, but many farms and estates own property which fall outside of the reliefs and will need to be revalued.

Significant house price growth has also occurred since the last revaluation date five years ago (1 April 2017) which means that many properties that previously fell below the £500,000 threshold, may now be caught by the tax.

The annual charge for properties valued between £1m and £2m is £7,700, which is broadly double the £3,800 payable for properties valued between £500,000 and £1m.

This highlights the importance of a reliable, up-to-date professional valuation – especially if the value falls close to the cusp of the bands – as it could result in significant savings over the next five years, while also protecting against penalties being incurred for undervaluing. Anyone affected would be wise to have this revaluation work undertaken in advance of next spring.