High-end property charge deadline nears

Owners of high-end properties held in companies have been warned not to miss a looming tax deadline that will affect thousands more this year.

The annual tax on enveloped dwellings (Ated), introduced in 2013 as a counter-avoidance measure, has expanded to include residential properties valued at more than £1m. Last year, the payment threshold started at £2m.

Unlike most taxes, Ated is due near the start of the tax year. For 2015-16, the deadline is April 30, with penalties for late payment, although owners of qualifying homes valued at £1m to £2m have until October 1 to file.

Dawn Register, a partner at accountants BDO, said that the early deadline, combined with the lowering of the threshold, "may come as a shock" to many taxpayers.

"We haven't had much publicity from [HM Revenue & Customs] since the introduction of Ated, so people could very easily get caught out by this."

Ated was introduced to deter individuals from avoiding stamp duty and inheritance tax by holding properties through corporate entities, but not using them for commercial purposes.

Among those targeted by the tax are non-resident investors with buy-to-let or "buy-and-leave" properties, said Andrew Cameron, a partner at law firm Charles Russell Speechlys.

For this group, who will typically hold UK property through companies, Ated is adding to a fast-growing tax burden, according to Mr Cameron.

"In itself, Ated would be seen as a manageable cost of holding an asset that is expected to hold its value, but with higher stamp duty [on expensive homes] and new capital gains tax liabilities, the charges are piling up."

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Moreover, following changes announced in the Autumn Statement that look to raise an extra £95m this year for the Exchequer, the charge is 50 per cent higher than last year for homes worth more than £2m. They now range between £23,350 (for the £2m-£5m bracket) to £218,200 for properties exceeding £20m.

From 2016, Ated - which raised at least £113m in 2014-15, according to provisional government figures - will be extended to properties worth upwards of £500,000.

Ms Register said that following years of rising house prices, this could bring many more buy-to-let investors, particularly in London and the Southeast, into paying the annual charge, which will be payable at £3,500.

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