By Sonal Shah
30 Jun 2025
Last updated: 29.05.2026
Since 2013, Non-Natural Persons (NNPs) including companies, partnerships with corporate members and certain collective investment schemes have been required to consider and submit annual ATED declarations if they hold high value UK residential property. Here is what you need to know if you are investing in a UK residential property via a corporate vehicle.
An ATED return is only relevant if a high-value UK residential property is held within a ‘corporate wrapper’ which is known as enveloped.
Whilst the threshold for high-value UK residential properties was initially set at £2,000,000, it was subsequently reduced to £1,000,000 from 1 April 2015 and from 1 April 2016 dwellings valued above £500,000 came within the scope of ATED.
Result:
ATED is based on the concept of a ‘dwelling’. Broadly, a dwelling is a property where all or part of it is used, or could be used, as a residence. This would typically include a house or flat, together with any gardens, grounds or buildings within them. HMRC’s guidance confirms that the test includes property which could be used as a residence, not only property that is actually being used as one.
A dwelling can also include a property that is in the process of being constructed or adapted for domestic use.
Certain types of residential accommodation are not treated as dwellings for ATED purposes. As a result, where a company holds these types of property, it may not be required to submit an annual ATED return.
Examples include hotels, care homes, hospitals, boarding schools, military accommodation and guest houses.
In addition, charitable companies using a property for charitable purposes, public bodies, and bodies established for national purposes may also fall outside the ATED charge.
A chargeable ATED period commences from 1 April until the following 31 March. ATED returns are usually submitted a year in advance. For instance, the ATED return for 2026/27 chargeable period ought to have been submitted to HMRC by 30 April 2026.
To calculate the ATED charge, you’ll need to value your property. The valuation date is a fixed date and property is revalued every five years for ATED purposes. Currently, ATED returns up until and including 2027/28 year are based on a property value as at 1 April 2022. If a property is acquired after 1 April 2022, the value used for ATED purposes is its Market Value as at the date of acquisition.
Unless the property qualifies for relief, each ATED return reports the value of the property within a certain valuation band, based on which the annual ATED charge is applied. The annual ATED charges for 1 April 2026 to 31 March 2027 can be found below.
ATED charges increase annually in line with the previous September’s Consumer Price Index.
ATED was introduced to discourage high-value UK residential property from being held in companies purely for investment purposes.
However, the rules do recognise that some properties are held in companies for genuine commercial reasons. Relief from the ATED charge may be available where, for example, the property is used in a qualifying property rental business, property development business, property trading business, or is occupied by certain qualifying employees.
Importantly, even where relief is available, an ATED return must still usually be submitted to claim the relief.
Care is also needed, as relief can be denied or withdrawn if the property is occupied by someone connected with the company or ownership structure. These are known as ‘non-qualifying individuals’ and can include the person who ultimately benefits from the property, as well as certain family members.
For example, if a company owns a high-value UK residential property and that company is ultimately owned by a trust settled by Mr A, relief is unlikely to be available if Mr A, his spouse or certain relatives are allowed to occupy the property.
The ATED relief rules can therefore be very valuable, but they need to be considered carefully to avoid unexpected charges.
ATED applies to high-value UK residential property held within a company or similar structure. However, not every property that includes accommodation will automatically fall within the charge. The first question is whether the property is genuinely residential in nature, or whether it is being used as part of a commercial business.
For example, hotels are generally outside the scope of ATED, and in some cases this may also apply to bed and breakfasts or similar guest accommodation. The position will depend on how the property is used in practice and whether it has the characteristics of a commercial business rather than a private residence.
This distinction is important, particularly where properties have mixed use, are being converted, or are held as part of a wider property business.
Care is also needed where a property is uninhabitable or undergoing development. A property in poor condition will not necessarily fall outside ATED, and newly built or converted properties can come within the regime once they are ready for occupation or become subject to Council Tax.
For companies holding valuable UK property, the key point is that ATED should not be considered in isolation. The nature of the property, how it is used, who occupies it and the timing of any development or conversion can all affect the position.
Taking advice early can help ensure that the correct filing position is taken and that any available exemptions or reliefs are properly considered.
For ATED purposes, it is important to understand exactly what property is being valued.
This can be more complicated where a company owns a large home with surrounding land, multiple buildings on the same estate, or a property with both residential and commercial areas.
The key question is whether the property should be treated as one dwelling, more than one dwelling, or partly outside the ATED rules.
This matters because ATED is based on the value of the residential property. In some cases, gardens, grounds or other buildings may also need to be included if they form part of the overall use and enjoyment of the home.
For companies holding high-value UK property, a careful review can help ensure the correct value is used and the ATED position is properly managed.
In some cases, the reasons for holding a property through a company may no longer be as strong as they once were.
Where the property is to be retained rather than sold, one option may be to remove it from the company structure. This is often referred to as ‘de-enveloping’ and, once completed, the property would generally fall outside the ATED regime.
However, de-enveloping can have wider tax and legal consequences, so it is important to take advice before making any changes. Should you wish to pursue this, please do get in touch with us so that we can assist you.
ATED is only one part of the picture when holding UK residential property through a company.
Corporate ownership can also bring wider tax and compliance considerations, including higher SDLT costs on acquisition and, for overseas companies, reporting obligations under the Register of Overseas Entities.
The right approach will depend on the ownership structure, the use of the property and the long-term intentions of the owners.
In summary, the ATED rules can be complex, particularly for companies holding high-value UK residential property. Taking advice early can help ensure the correct filing position is taken, available reliefs are considered and unexpected charges are avoided.
If you would like to discuss how ATED may apply to your property or structure, please get in touch with our team today.
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