ATED traps for landlords
The ATED charge was introduced over 10 years ago in April 2013, but it seems that some accountants are still not familiar with the legislative traps which can leave property owners liable to pay penalties even where no tax is due.
The ATED charge is only payable when a UK residential property, worth £500,000 or more, is held by a company or other non-natural person, such as a trust or partnership with a corporate member.
The charge is annual (clue’s in the name) so a return must be submitted to HMRC by 30 April within each relevant year that starts on 1 April; 30 days after the beginning of the chargeable period.
Where a property is acquired during the year, the HMRC guidance clearly states that an ATED return must be submitted within 30 days of acquisition, or for a newly built property within 90 days of the earliest of the date:
- the property becomes a dwelling for Council Tax purposes; or
- it is first occupied.
A separate ATED return must be submitted for each property, unless relief or exemption applies, in which case a number of properties can be included on one ATED relief declaration return if they all qualify for the same relief or exemption.
The two most common ATED reliefs apply where the property is:
- commercially let to tenants not connected with the owner; or
- being developed for resale.
Fertile penalty area
The big trap for ATED is that a return is due each year even if there is no tax to pay, and late filing penalties are charged if that ATED return is not delivered on time.
The structure of the penalties is similar to those for income tax self-assessment tax returns, as set out in FA 2009, Schedule 55:
- £100 when the return is one day late
- £10 per day for up to 90 days when the return is three months late
- The greater of £300 and 5% of tax due when the return is six months late
- The greater of £300 and up to 200% of tax due, when the return is 12 months late
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