Category: Stamp Duty Land Tax

The Annual Tax on Enveloped Dwellings (ATED) is a tax payable by limited companies that own interests in residential properties valued at more than £500,000.

https://www.gov.uk/government/publications/annual-tax-on-enveloped-dwellings-technical-guidance

These provisions affect certain companies, partnerships with company members and managers of collective investment schemes described in the legislation as NNPs.

To value a property, you can use a professional valuer or determine your own valuation. The valuation of the property must be in pounds sterling. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount.

The valuation date depends on when you owned the property.

The valuation dates are:

• an initial valuation date,
• a revaluation date.

There are fixed revaluation dates for all properties, every 5 years after 1 April 2012, for example on 1 April 2017, 1 April 2022 and so on, regardless of when the property was acquired.

The value of the property for any chargeable period is therefore the later of:

• its initial valuation date,
• the revaluation date.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs if a property is used for commercial purposes.

If you need any help understanding in more depth, please get in touch with us.

HMRC’s published guidance on the application of the 3% higher rate of Stamp Duty and Land Tax (SDLT) has been updated for mixed use properties.

A ‘mixed’ property is one that has both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office.

The higher rates of SDLT were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let and second homes.

https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-rates

At the time the new higher rates were introduced, HMRC confirmed that where there was a purchase of mixed use buildings consisting of residential and non-residential properties that the 3% higher rate of SDLT applied to the dwelling element.

HMRC’s guidance on this issue was updated on 13 November 2020. The new guidance makes it clear that HMRC’s view has changed and that the 3% surcharge will not apply to the dwelling element. The guidance adds the caveat that the non-residential element of the transaction is neither negligible nor artificially contrived.

This change could allow affected purchasers to claim back any overpaid SDLT on mixed use, multiple dwelling transactions from HMRC within the legal time limits. HMRC’s guidance also suggests that purchasers can now make a non-statutory clearance application in the event of uncertainty over a transaction.

 

If you need any further advice feel free to contact us.