In April 2015, new tax changes will come into place which will leave some property investors, who have access to and use company vehicles, to be greeted with an additional charge.

These changes made are as part of the ‘Anti Avoidance Reforms’ which is a government package to discourage the purchase of UK residential property in something known as ‘corporate envelopes’, it is also used to discourage property holdings within this.

The threshold for the properties that fall under the category of ATED (Annual Tax for Enveloped Buildings) was reduced due to the budget reduction which went from £2million down to £1million.


Following last year’s fall, 2016 is showing that there will be another fall within the threshold and will bring the price down to £500,000. This will force the owners of homes which are either fully or partly owned by a partnership with a corporate member or by a company to submit an ATED return as the drop in threshold will bring down hundreds, maybe even thousands more residential assets into the area between the tax brackets.

These payments must be made by the 31st of October as the returns would be due by the 1st of October.

Next year in April the properties in which where valued at no more than £1million and no less than £500,000 will receive an annual extra bill of £3,500.

A company would be excluded from the tax obligation if the properties in which they own are being used for charitable purposes. For those which are not being used for these purposes may be able to claim to reduce the tax as there are reliefs available, however these claims can only be made if a tax return is completed and sent in.

It is thought that many people who use their property as real estate investment vehicles and who run businesses where and still are unaware of this tax problem as the changes had not been officially announced as, in the words of Sue Crossley (A founding partner of ‘the country house company) “it had been tucked away in the small print of the 2014 budget.”


Charanjit Thandi is a property partner at DW Solicitors