Changes to the scope of Annual Tax on Enveloped Dwellings

A rebasing of thresholds in relation to the Annual Tax on Enveloped Dwellings (ATED) could bring more housing associations within its scope with effect from 1 April 2023.

The ATED was introduced 10 years ago to discourage ownership of UK residential property by companies – for example, for tax mitigation purposes. The ATED is an annual charge on UK property owned by a company or by a partnership with at least one company member (subject to certain reliefs and exemptions).

The ATED applies with reference to years commencing 1 April. For periods to 31 March 2023, the charge is applied if the property was worth more than £500,000 at the date of acquisition or completion, or more than £500,000 at 1 April 2017 if the property was owned at that date. However, from 1 April 2023, the ATED will apply if the property was worth more than £500,000 at the date of acquisition or completion, or more than £500,000 at 1 April 2022 if the property was owned at that date.

This change means that it’s quite possible that a property which was worth less than £500,000 in 2017, and therefore not within the scope of the ATED at the time, but was worth more than £500,000 on 1 April 2022, will now be subject to the ATED.

There are, however, a number of exemptions and reliefs from the ATED. In particular, dwellings owned by charities are not subject to the ATED, so homes owned by charitable housing associations, for example, will not be subject to the charge.

There are also reliefs for:

  • Residential properties used in a commercial property rental business, which should include, for example, a subsidiary of a housing association which is involved in the provision of properties for rent on the open market.
  • Commercial property developers, which should include market-sale subsidiaries of housing associations.
  • Properties held in stock, where the properties are bought and sold as part of a commercial property dealing business.
  • Dwellings acquired by a housing association, where the acquisition of the property benefited from, or could have benefitted from, relief from Stamp Duty Land Tax for acquisitions by housing associations.

Importantly, although the relief for charities is automatic, the above four reliefs must be claimed. If a housing association or a subsidiary company owns dwellings that are worth more than £500,000, and if they wish to benefit from the ATED reliefs for property rental businesses, property developers, property traders and housing associations, then they must make a claim for that relief to HM Revenue and Customs. A claim for the year commencing 1 April 2023 should be made by 30 April 2023.

housing associations that are most likely to be impacted are those where dwellings worth more than £500,000 are owned by:

  • A non-charitable housing association.
  • A market rent subsidiary.
  • A market sale subsidiary, where the properties might not be sold before the date the property is first subject to Council Tax or is first occupied – whichever is the earlier (this being the point at which the dwelling would begin to be subject to the ATED).

Those impacted should consider making a claim for relief by 30 April 2023.


RSM is a leading provider of audit, tax and consulting services, with around 3,800 partners and staff in the UK. We're working with our tax advisors RSM to help shape government policy on taxation as it affects the sector and to keep housing associations informed of key issues.

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Who to speak to

Adam Gravely, Finance Policy Officer