At present certain non-natural persons holding high value residential property pay an annual tax charge (the ‘ATED’ charge).
The government intends to increase the charge by 50% above inflation for residential properties worth more than £2 million.
|Property Value (£)||Annual charge in 2014/15||Annual charge in 2015/16|
|1m – 2m||£nil||£7,000|
|2m – 5m||£15,400||£23,350|
|5m – 10m||£35,900||£54,450|
|10m – 20m||£71,850||£109,050|
Additionally, from 2016/17, there will be a £3,500 charge on enveloped properties worth between £0.5m and £1m.
Increasing the tax charges so soon after the introduction of the ATED charge creates further uncertainty to those investing in UK property.
No doubt, many individuals will look to ‘de-envelope’ UK property to avoid these charges.