Annual Tax on Enveloped Dwellings (ATED): What UK Property-Owning Companies Need to Know in 2026

If you own UK residential property within a company, it’s important to understand Annual Tax on Enveloped Dwellings (ATED). Even where no tax is payable, companies often need to file an ATED return and missing a submission can result in penalties.

What is ATED? Understanding Annual Tax on Enveloped Dwellings

ATED is an annual tax that applies to high-value UK residential properties owned by companies, certain partnerships, and other non-natural persons. Introduced in 2013, the regime discourages high-value residential property from being held in corporate structures while ensuring fairer taxation alongside measures like Stamp Duty Land Tax.

At present only residential properties worth in excess of £500,000 are affected by the regime. Even if a property qualifies for relief, most companies must still submit a return to HMRC.

Property valuations for ATED are based on fixed HMRC revaluation dates. The most recent revaluation was 1 April 2022, which applies to multiple future chargeable periods. Properties acquired after this date use their acquisition value for ATED purposes.

The ATED charge is banded according to property value. For the 2025/26 chargeable period, the annual charges are:

• £500,001 – £1,000,000: £4,450
• £1,000,001 – £2,000,000: £9,150
• £2,000,001 – £5,000,000: £31,050
• £5,000,001 – £10,000,000: £72,700
• £10,000,001 – £20,000,000: £145,950
• Over £20,000,000: £292,350

Charges are uprated annually in line with inflation. For the 2026/27 period, rates will increase slightly, so always check the latest HMRC guidance when preparing returns.

Reliefs and exemptions for ATED returns

Many companies qualify for ATED reliefs, meaning no tax is payable. Common reliefs include:

• Properties let commercially to third parties
• Properties held as part of a property development trade
• Employee accommodation

Even if a relief applies, a return must usually still be submitted each year to claim it. Failure to do so is one of the most common compliance issues.

Filing ATED Returns: Deadlines and compliance tips

The ATED return submission portal opens annually on 1 April, with a deadline of 30 April for the relevant chargeable period. Late submissions can result in penalties, even if no tax is due. Changes during the year, such as acquiring new property, changing property use, or restructuring ownership, may also trigger filing requirements.

A proactive annual review of property ownership, relief eligibility, and filing obligations is essential to avoid penalties and ensure compliance.

Issues often arise when a property is acquired part-way through the year, relief is assumed without filing a return, or internal processes are inconsistent. Reviewing your ATED obligations early ensures all returns are submitted correctly, reliefs are claimed where appropriate and penalties are avoided.

If you would like some help to identify which properties fall within the scope of ATED or to assess property valuations and chargeable bands, contact us now for more information so that we can help you stay compliant ahead of the April 2026 deadline. We can also help prepare and submit ATED returns to HMRC as well as confirm and claim the correct reliefs.

Stephanie Hurst