Who is liable to pay Annual Tax on Enveloped Dwellings (ATED)?
The Annual Tax on Enveloped Dwellings (ATED) is an annual tax charge that applies to certain high-value UK residential properties owned by companies and other non-natural persons (NNP’s), see below.
If your business or investment structure owns a UK residential property valued at more than £500,000, it is important to understand whether ATED applies and what your reporting obligations are.
What is ATED?
ATED is a tax charged on UK residential properties that are owned through corporate or similar structures, rather than directly by individuals.
The legislation is intended to ensure that high-value residential properties held within these structures are subject to an annual tax charge where the property’s value exceeds the relevant threshold.
Who does ATED apply to?
ATED primarily applies to companies that own UK residential property valued at more than £500,000.
However, the rules can also apply to other non-natural persons (NNPs), including:
• Partnerships that have one or more corporate partners.
• Collective investment schemes managed by a qualifying fund manager.
• Other organisations that are treated as non-natural persons under the legislation.
Determining whether ATED applies can be complex, particularly where properties are held within wider business or investment structures.
What counts as a dwelling?
For ATED purposes, a property is generally considered a dwelling if it is used, or could be used, as a residence.
This includes:
• Houses
• Flats and apartments
• Associated gardens and grounds
• Buildings located within the grounds of the property
ATED rates from 1 April 2026
The amount of ATED payable depends on the property’s taxable value.
Property value Annual ATED charge (2026/27)
More than £500,000 up to £1 million £4,600
More than £1 million up to £2 million £9,450
More than £2 million up to £5 million £32,200
More than £5 million up to £10 million £75,450
More than £10 million up to £20 million £151,450
More than £20 million £303,450
Do you need to review your ATED position?
Businesses and property owners should regularly review the value of residential properties held within corporate structures to ensure they remain compliant with HMRC’s ATED rules.
Although reliefs and exemptions may be available in certain circumstances, these often need to be claimed, even where no tax is ultimately payable.
If you are unsure whether your property falls within the scope of ATED, or need advice on your reporting obligations, our tax specialists can help you understand the rules and ensure you remain compliant with HMRC requirements.
Contact Moore South below.