The ‘Annual Tax on Enveloped Dwellings’ (ATED) was introduced in 2013 to tackle the avoidance of stamp duty land tax. The charge relates to residential property with a value over £1m owned by a ‘non-natural person’, generally a company or a partnership with a corporate member.
Properties valued in the £1m to £2m band are charged £7,000 per annum, and the bands increase such that properties valued at over £20m are charged £218,200. From 1 April 2016 a further band will come into effect for properties with a value greater than £500,000 but not more than £1m, attracting an annual charge of £3,500. The charge is paid in advance, annually and in the year of purchase plus there are in-year filing requirements.
Although this tax is aimed at the foreign wealthy property investor, it will also affect all British Nationals temporarily living abroad and those emigrating and retiring abroad, as many use the facility of placing property within corporate ‘envelopes’. However, this approach may still be beneficial for taxpayers wishing to save IHT.
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