A technical note on the proposed Disclosure of Tax Avoidance Scheme hallmark for the Annual tax on Enveloped Dwellings (ATED) has been published. It includes draft Regulations, and the normal Explanatory and Tax Information and Impact Notes. In addition, the final version of the Annual Tax on Enveloped Dwellings Return for 2013-14 has now been published. The deadline for submission online is 1 October 2013.

By way of reminder, Finance Act 2013 introduced this new tax – the ATED. In some cases properties are owned by a company (or other entities, for example a collective investment vehicle). In these circumstances the property is said to be ‘enveloped’ because the ownership sits within a corporate ‘wrapper’ or ‘envelope’.

ATED is a tax payable by entities which own such ‘enveloped’ residential properties. It applies where the property is situated in the UK and is valued at more than £2m on 1 April 2012 (or at acquisition if later). ATED started on 1 April 2013 and is payable each year. The tax is a fixed amount that is payable based on the band into which the value of the property corresponds.

There are 4 bands as follows:

The amount charged per band is to be increased by the consumer prices index annually. There are also reliefs that could reduce the tax completely which are required to be claimed in a return.

Finance Act 2013 added ATED to the list of taxes to be covered by DOTAS. In order to be more certain that HMRC get early warning of such schemes, regulations are also being introduced to describe the types of ATED schemes requiring disclosure. Additional regulations are also required to set out the information requirements and time limits for complying with a disclosure obligation.

The technical paper now issued covers these matters and comments are requested by 27 August 2013. More information on ATED is available on the HMRC website.