When it came into effect, only dwellings valued above £2 million were subject to ATED. The annual chargeable amounts are usually increased each year in line with inflation based on the previous September’s consumer price index (CPI). For each range a fixed chargeable amount applies. The bands are based on the value of the dwelling on the most recent valuation date.

The amount of the ATED charge is determined according to which of the six bands the dwelling falls within, the number of chargeable days the property is owned for during the chargeable period and whether any relief or exemption applies.

The chargeable period for ATED comprises 12 months and runs from 1 April to 31 March of the following year. All companies (whether UK incorporated or not) holding UK residential property (“ dwellings”) valued over £500,000 are now within the scope of the annual charge. The charge was created to discourage the holding of residential property in the UK through corporate structures (enveloping) – especially high value properties for personal use. April 2023 marks the tenth anniversary of the Annual Tax on Enveloped Dwellings (“ ATED”), it having been introduced in the 2013 Finance Act.

Retrospective relief