Having property in a corporate structure offers one with tax planning flexibility and ease of business. However, it also has some tax obligations that need to be complied with by entrepreneurs and property investors. One of them is the filing of an Annual Tax on Enveloped Dwellings (ATED) return.
Failure to meet ATED filing requirements can result in high penalties and interest. Let us take a look at the circumstances in which a corporate property owner is required to file this return and how.
When Is an ATED Required?
There must be an ATED return submitted if a business has UK residential property worth more than £500,000. This applies whether the business is based in the UK or abroad. The valuation date is typically on 1 April every five years, the last being 1 April 2022.
Even if there is not tax due—for instance, if the property qualifies for a relief—you have to file a return. Common reliefs include properties rented out to third parties or retained for property development.
Key Deadlines You Should Know
The ATED period runs from 1 April to 31 March each year. Property owners must make their return within 30 days of acquiring a new property or having a property development completed. For a property they already own, the return should be filed by 30 April at the start of every ATED period.
Missing these deadlines will incur penalties for late filing, which increase the longer the return is outstanding. Keeping on top of these dates prevents unnecessary penalties.
How to File Corporate Property Tax Return
Companies can file an ATED return digitally through the HMRC ATED online service. You will register and will need to supply information such as the value of the property, ownership details, and any relief claims you are entitled to.
It is recommended to acquire necessary documentation beforehand, including up-to-date valuations of property and records of company ownership. This advance planning makes the online submission process much simpler and reduces the likelihood of mistakes.
Mistakes to Avoid
A common error is assuming no taxation implies no return is necessary. As stated earlier, a return is required even if a relief is taken so that the liability is zero. Miscalculation of property valuations or failure to meet the valuation deadline is another error.
Additionally, the inability to update property records when a sale or transfer is made can lead to incorrect returns in the future. Periodic verification of corporate property ownership ensures that all returns are made timely and correctly.
Conclusion
Business ownership of property can prove advantageous but comes with some reporting conditions, e.g., reporting via an ATED return. Having knowledge about when and how to do this will avoid companies from paying hefty penalties and compliance issues.
If you’re unsure about your ATED obligations or how to submit ated return and require assistance with the submission process, consulting experts like UK Property Accountants is a smart choice. Their experience in property tax matters ensures your filings are accurate, timely, and fully compliant.
