Annual Tax on Enveloped Dwellings charge.
Annual ATED charge (2025-26)
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Valuation band
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A tax on holding property through a company
The Annual Tax on Enveloped Dwellings is a yearly charge on UK residential property worth more than £500,000 that is held inside a corporate wrapper, the so-called envelope. It was introduced to discourage people from owning their homes through a company purely to dodge stamp duty and inheritance tax. The charge is not based on rental income or profit. It is a flat figure determined solely by which valuation band the property falls into, which is why this calculator only asks for the property value. Enter a figure and it returns the fixed 2025-26 charge for that band.
The bands run from £4,450 a year for property valued between £500,000 and £1 million, up to £292,350 a year for property worth more than £20 million. This tool is for company directors, family investment companies, and their accountants who need to know whether a property is in scope and what the worst-case annual bill looks like before reliefs.
The relief most holders rely on
Here is the point that trips people up. Most companies that hold residential property never actually pay ATED, because a long list of reliefs can reduce the charge to nil. The big ones are for property let commercially to unconnected third parties, property held as trading stock by a developer, and property held by a property trading business. A genuine buy-to-let owned by a company, let at arm's length, will usually qualify for full relief and pay nothing.
But, and this is the trap, relief is not automatic. You must file an ATED return to claim it, and the deadline is strict: the return and any payment are due by 30 April at the start of the chargeable period that runs from 1 April to 31 March. Miss the filing and HMRC can charge penalties even though the tax due was zero. I have seen directors assume that because no tax is payable, no return is needed, and then face a penalty for a nil-charge property.
Pricing the charge on a £2.5 million enveloped house
Suppose a company holds a London house valued at £2.5 million and the property is occupied by a connected person, so no relief applies. That value falls into the £2 million to £5 million band.
| Step | Detail |
|---|---|
| Property value | £2,500,000 |
| Valuation band | £2m to £5m |
| Annual ATED charge 2025-26 | £31,050 |
| If commercially let to a third party | £0 (relief claimed on a return) |
The chart shows how the flat charge steps up across the lower bands. Notice these are cliff edges, not a smooth slope: cross a band boundary by a single pound and the whole charge jumps to the next tier.
Getting the valuation date right
The band depends on the property's value at fixed revaluation dates set by HMRC, not its current market price every year. Properties are revalued every five years, and you also value at the date of acquisition if you buy in between. Using the wrong valuation date is a frequent source of error, because a property bought years ago may have crossed into a higher band at the latest revaluation point without the owner noticing. If your property sits within a few percent of a band boundary, a professional valuation is worth the cost, since being on the wrong side can mean tens of thousands of pounds a year.
Does ATED apply to a company that develops and sells houses?
Generally no charge is payable. A property held as stock by a genuine property developer qualifies for relief, as does one held by a property trading business, provided it is not occupied by anyone connected with the company. As always, the relief must be claimed on an ATED return, even though the resulting charge is nil.
Is there a separate stamp duty cost when a company buys?
Yes, and it is steep. A company buying residential property over £500,000 typically pays the flat 15 percent higher-rate SDLT charge for corporate purchasers, on top of which the standard ATED then applies annually. The combination of a 15 percent entry charge and a recurring annual tax is precisely why holding a family home through a company rarely makes sense once you run the numbers.