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Introduction to the Annual Tax on Enveloped Dwellings (ATED). Storyboard for. …clear thinking. By completing this module you will be able to: Explain the key aspects of ATED Advise a client on the circumstances in which ATED applies and any exceptions to the charge

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  1. Introduction to the Annual Tax on Enveloped Dwellings (ATED) Storyboard for

  2. …clear thinking

  3. By completing this module you will be able to: Explain the key aspects of ATED Advise a client on the circumstances in which ATED applies and any exceptions to the charge At the end, you can visit useful Internet sites on a “Web Ride” Lecturer: Julian J.B. Hickey Learning time: approx. 20 min How to use this learning module? - Click on "Help" in the Table of Contents (TOC) Introduction to the Annual Tax on Enveloped Dwellings (ATED) Graphic: [presenter or standard graphic]

  4. Effective from 1 Apr 2013 Applies to residential dwellings held by non-natural persons Policy to discourage holding of UK residential property in structures that would otherwise avoid SDLT (e.g. by sale of shares in a company owning the property) Note that Capital Gains Tax (CGT) may also be payable on disposals Overview – What is Annual Tax on Enveloped Dwellings? Graphic: [a complex bit of clockwork/ mechanism]

  5. ATED applies: To a dwelling in the UK, Valued at over £2million, The dwelling is owned wholly or partly by a non-natural person: A company A partnership where one partner is a company A collective investment scheme ATED does not apply to direct ownership of a dwelling by an individual, nominees or trusts Exemptions for commercial use of residential property Payable by the chargeable person When is ATED triggered? Graphic: [a cricketer appealing]

  6. Property value Annual Charge – 2013/14 Band 1:> £2m - 5m £15,000 Band 2:> £5m - 10m £35,000 Band 3:> £10m - 20m £70,000 Band 4:> £20m+ £140,000 What is the amount of tax chargeable? Graphic: [a chess clock]

  7. A building or part of a building counts as a dwelling at any time when: it is used or suitable for use as a single dwelling, or it is in the process of being constructed or adapted for such use Land that is, or is at any time intended to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on such land) is taken to be part of that dwelling at that time. Multiple dwellings/connected persons Exclusions: Hotels, hospitals, student halls of residence, care homes What is a dwelling? Graphic: [car key in the ignition]

  8. 1 Apr 2012 (which is the first valuation date) or date of acquisition if later New or altered properties: earlier of date of entry on Council Tax Valuation Lists, or occupation Re-valued every 5 years Professional valuation No deduction is permitted for borrowing associated with the dwelling (contrast IHT rules) Valuations for ATED Graphic: [a laser cutting metal]

  9. Relief from ATED must be claimed on tax return Reliefs for dwellings include: Letting to a third party on a commercial basis (but dwelling must not be occupied or available to a connected person) Reliefs Graphic: [the sorting hat from Harry Potter]

  10. Held for charitable purposes Open to the public for at least 28 days per year Part of a property trading business where the property is held for the sole purpose of resale For the use by employees or partners in a business where the employee/ partner does not have have more than 10% interest in the company/ business Farmhouses occupied by farmers Property development businesses where property held exclusively for development and resale Reliefs (cont) Graphic: [the sorting hat from Harry Potter]

  11. The key things to remember from this module are: Identify whether the property is a dwelling held by a non-natural person Identify the dwelling is valued more than £2million Identify whether a relief is available for ATED which can be claimed on the tax return Summary Graphic: [standard summary graphic]

  12. Web Ride

  13. …clear thinking

  14. Please select the correct answer(s) and then click on “Submit” What is ATED charged? The sale of property owned by individuals The sale of property owned by UK companies Dwellings owned by non-natural persons that are UK incorporated Dwellings owned by non-natural persons irrespective of whether resident or incorporated in the UK Question 1

  15. Please select the correct answer(s) and then click on “Submit” ATED: Is a tax imposed as a percentage of the value of a dwelling Is a tax that applies only to non-resident non-natural persons Is a tax imposed on the value of properties falling into different bandings Is a tax that is only imposed if there is no charge to SDLT on the transfer of a dwelling Question 2

  16. Please select the correct answer(s) and then click on “Submit” Relief from ATED can be claimed on an ATED return where: A dwelling is let to a connected person A dwelling is let to a third party on a commercial basis, and the dwelling is not occupied or available to a connected person A dwelling is let to a third party on a non-commercial basis A dwelling is let for charitable purposes Question 3

  17. Now you have finished this module and acquired basic knowledge on ATED If you answered all the questions in the Quiz correctly, you can print out your personal certificate by clicking on the link Thank you for your attention! Finish Graphic: [standard finish graphic]

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