Reducing the Annual Tax on Enveloped Dwellings (ATED) threshold to £500,000 will have disproportionate impact in the South East, according to property specialists Bruton Knowles.
Naomi Quick from the firm’s Guildford office has alerted landowners to be aware of the full implications of HMRC reducing the ATED threshold from properties worth £1m down to properties worth £500,000 this April.
Naomi said: “This will affect the greater proportion of homes in the South East as residential property values are correspondingly higher to start with. Lowering the threshold will bring significantly more properties within this category.
“The reduction will be widely felt but some people we have spoken to appear unaware of the full implications, potential problems – and the reliefs available.”
Enveloped properties are residential homes owned by a company or non-resident – typically top London addresses, second homes or holiday cottages.
If the property is valued at £500,000 or more it will be subject to a £3,500 charge due by October this year.
Naomi Quick went on: “While farmhouses which are used as such are exempt, people who hold a farm or buildings in a trust or offshore company will be eligible for the new tax.”
“ATED was originally introduced by HMRC in a bid to claw back money from people who use company set-ups to avoid large tax bills. But with farm and estate properties worth so much more the net has been widened considerably. Our valuation team is advising clients on the extent to which they are affected.”
Properties which are affected will be able to claim against a number of reliefs, but returns will still need to be filed.
Naomi said farmhouses used for agricultural purposes, property rentals to an unconnected third party, historic houses and employee accommodation could qualify for relief.