My Blog of 31 August ran through the recent history of property taxation in the UK. It identified that ATED (the Annual Tax on Enveloped Dwellings) was introduced a number of years ago with a consequential impact for Capital Gains Tax and Stamp Duty Land Tax.

ATED is a tax charged on non-natural persons (for example companies or partnerships with at least one company member) which hold an interest in one or more UK residential dwellings. The tax is applicable to both non-natural persons incorporated in the UK and incorporated overseas. You will also appreciate that there is a difference between a charging return and a relieving return with only a charging return leading to a tax liability and therefore valuation considerations.

The ATED charge is a fixed sum depending into which band of value the property falls. The valuation date is the later of 1 April 2012 and the date that a property is first subject to ATED. When a property is newly acquired the valuation date is the acquisition date. Should a property come into existence for the first time then the determining date is the date that it is first recognised for Council Tax purposes.

The filing date for an ATED Return is 30 days from the date the property first falls into the ATED charge. There are extensions to 90 days in prescribed situations such as the creation of a new dwelling. All enveloped properties held on each 1 April need to be subject to an ATED filing. The deadline for these filings remains 30 days later, being the end of April.

When ATED was first introduced in 2013 the first charge was for properties worth more than £2m on 1 April 2012. Since 2013 ATED has applied to properties of lower value and now ATED applies to properties worth more than £500,000.

Valuations

When ATED was first introduced in April 2013 the first valuation date was 1 April 2012. This was helpful as it gave taxpayers the opportunity to obtain valuations and determine if their properties were worth more than £2m more than twelve months prior to the introduction date for ATED. Accordingly taxpayers had time to obtain valuations and plan for the impact of ATED.

The ATED regulations state that the valuation would be revised every five years and therefore properties will need to be revalued on 1 April 2017 to determine into which band they fall. As ATED applies to properties worth more than £500,000 there will be many properties which fall into the ATED regulations for the first time on 1 April 2017. Although there is no statutory requirement to appoint property valuation professionals to revalue the property, this is the safest course of action as it demonstrates a greater level of HMRC compliance than using a director’s valuation.

As there are going to be considerable numbers of properties subject to ATED from April 2017 and therefore considerable numbers of valuations to be determined we believe that there is going to be a shortage of access to valuation professionals in April 2017. In order to allow our clients the best possible access to valuation services we are in discussion with them about either having valuations undertaken between now and April (with a desktop review at 1 April 2017) or making bookings with valuers for six months hence. We have a number of surveyor clients who we can recommend with our recommendation being based on factors such as the type of property, the location of the property and any special features of the property.

In conclusion there is an understood benefit of employing a valuation professional for ATED purposes and we can foresee a shortage of these services next spring. We are presently speaking to our clients about pre-planning for this future requirement.