Annual Tax on Enveloped Dwellings reliefs for charities

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Annual Tax on Enveloped Dwellings (ATED) was introduced in 2013 to tax companies holding residential properties with a value of more than £0.5m to discourage use of such structures to minimise SDLT.

The operation of ATED is complex, but there is an exemption from ATED for charitable companies which hold residential property either:

for use in furtherance of the charitable purposes of the charitable company or of another charity, or
as an investment from which the profits are (or are to be) applied to the charitable purposes of the charitable company.

However, the relief is subject to a long list of strict conditions (see section 42 of the HMRC technical guidance). Charities should note that the exemption is not available where there are arrangements in place at the time of donating residential property to a charity, for the donor, or an associate of the donor, to occupy the property.

CTG does not provide tax advice and so the information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.