ATED revaluation: Why 1 April 2027 matters for property-owning companies

Key changes are just around the corner for companies and other corporate structures holding UK residential property as the Annual Tax on Enveloped Dwellings (ATED) reforms draw nearer.

Under the ATED legislation, relevant properties must be revalued every five years and the next valuation date falls on 1 April 2027.

The value of each property on that date will determine its ATED band and, therefore, the annual charge for periods from the 2028-29 tax year onwards.

With residential values having moved considerably in many areas since the last valuation date of 1 April 2022, the outcome could be significant for some corporate property owners.

Who could be affected?

The revaluation is most obviously relevant to companies that already hold residential property worth more than £500,000 within the ATED regime, whether that property is held as stock or on the balance sheet.

A higher valuation could move a property into a higher band, with a corresponding increase in the annual charge.

Two further groups should review their position:

• Owners of residential properties currently valued close to an ATED threshold, which could move into the regime following the 1 April 2027 valuation.
• Owners of properties that have seen a significant increase in value since the last revaluation.

Where a relief applies, such as for property rental or development businesses, a declaration return is still required.

A property newly caught by ATED may, therefore, create a filing obligation even where no tax is due.

Does the valuation need to be formal?

A formal valuation is not required and owners can carry out the valuation in-house, but where they do, it should be documented appropriately so the figure can be supported if HMRC raises questions.

The valuation should reflect the open market value of the property on 1 April 2027 and be a specific figure rather than a range.

Where a value falls within 10 per cent of a band threshold, HMRC’s pre-return banding check can be used to confirm which band applies.

Planning ahead

Although the first returns based on the new values will not be due until 30 April 2028, leaving the exercise until then risks a rushed valuation and an unexpected bill.

Using the coming months to identify affected properties and gather evidence of value will make the process far more straightforward, as will checking that any reliefs claimed still apply.

To discuss how the 2027 revaluation could affect your company, please get in touch with our team.

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