Farmers with limited companies holding residential property are reminded of the imminent filing and tax payment deadline for the Annual Tax on Enveloped Dwellings (ATED).
The deadline for the 2023/24 year ahead falls on 30 April 2023, Saffery Champness has today reminded farming businesses.
The legislation was introduced to discourage the holding of UK residential properties through limited company vehicles, something which had increased in popularity, particularly with overseas investors.
The threshold for properties to be caught by the legislation has gradually reduced from the initial £2m bar, when the legislation was first introduced, to the current threshold of properties with a value exceeding £500,000.
Martyn Dobinson, partner at Saffery Champness said: "The property values are determined with reference to the valuation date which updates every 5 years.
"The previous valuation date was 1 April 2017, and the new reference date, which is applicable for the 2023/24 year and going forward, is 1 April 2022.
"There is no statutory requirement for a formal valuation, but any determination should be able to stand up to scrutiny by HMRC.”
Properties valued at £500,000 or less on 1 April 2022 do not need to be reported by 30 April, Saffery Champness explains.
Those that are valued at more than £500,000 on 1 April 2022 need to be reported and any tax due needs to be paid by the reporting date.
Whilst most properties valued at over £500,000 and under corporate ownership would still need to be reported, there are certain reliefs that can mitigate the tax charge.
Scenarios where the tax charge may be relieved include where the property is:
• Let on a commercial basis and is at no time occupied by or available to anyone connected with the owner;
• Open to the public for at 28 days in the year;
• Being developed for resale by a property developer or is being held as stock for resale;
• Provided by a trading business to certain qualifying employees as living accommodation;
• A farmhouse occupied by a farm worker or a former long-serving farm worker.
