Owning UK Property Through a Company: ATED and the Non-Resident Surcharges

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. It was introduced to discourage the practice of holding high-value homes inside a company or other corporate wrapper, often called enveloping, to sidestep stamp duty and other charges. If your dwelling sits inside such a structure and is worth above the threshold, you are within scope and must engage with ATED every year, even if no tax ends up being payable.

The charge applies to three types of owner. The first is a company. The second is a partnership where at least one of the partners is a company. The third is a collective investment vehicle, such as a unit trust or an open-ended investment company. An individual who owns a UK home in their own name is outside ATED entirely, however valuable the property. ATED is a tax on the structure, not the property itself.

Three conditions must all be met for a property to be a chargeable dwelling. It must be residential (broadly, somewhere capable of being lived in as a home, including its grounds). It must be owned by one of the entities above on the relevant day. And its value must exceed £500,000. The value used for the 2026/27 year is the property's value on 1 April 2022, or its acquisition cost if it was bought after that date. These fixed valuation dates are revalued every five years, so the next general revaluation date is 1 April 2027 and will first apply to the 2028/29 charge.

Because ATED keys off a structure rather than a person, cross-border owners are caught often. A non-resident family that bought a London flat through an offshore company, or a UK entrepreneur who put a buy-to-let into their trading company, can both find themselves filing ATED returns without ever having heard of the tax. The charge does not depend on where the company is incorporated or where its owners live.

For the 2026/27 chargeable period the ATED charge ranges from £4,600 for properties just above the threshold to £303,450 for those worth more than £20 million. The tax is not a percentage of value; it is a fixed amount set by reference to the band your property falls into. The bands and 2026/27 annual charges are as follows.

• More than £500,000 up to £1 million: £4,600
• More than £1 million up to £2 million: £9,450
• More than £2 million up to £5 million: £32,200
• More than £5 million up to £10 million: £75,450
• More than £10 million up to £20 million: £151,450
• More than £20 million: £303,450

The chargeable period runs from 1 April 2026 to 31 March 2027. If a company is within scope at the start of that period, the return must be filed and the tax paid by 30 April 2026, that is, within the first month of the year being taxed. This is unusual: most UK taxes are paid after the period they relate to, whereas ATED is paid up front. The charges rise each year in line with the previous September's Consumer Prices Index, so the figures above are specific to 2026/27 and should be re-checked for later years.

Where a property is owned for only part of the year, the charge is reduced on a daily basis for the days it is held. If a band boundary is genuinely uncertain, for example a property valued at close to £1 million or £2 million, you can ask HMRC for a Pre-Return Banding Check to confirm which band applies before you file. This is worth doing whenever a small difference in valuation moves the property between bands worth tens of thousands of pounds a year.

Reliefs remove the ATED charge entirely for genuine commercial uses of the property, but you must still file a return to claim them. The whole point of ATED was to deter enveloping for private use, so where a company holds a dwelling as part of a real business the charge can be reduced to nil. The catch, and it is a serious one, is that the relief is not automatic. You have to claim it on a Relief Declaration Return by the filing deadline, or HMRC treats the charge as payable.

The main reliefs cover the situations you would expect a property business to involve. They include:

• A property rental business, where the dwelling is let on a commercial basis to people unconnected with the owner
• Property developers holding the dwelling as stock for resale
• Property traders buying and selling dwellings in the course of a trade
• Dwellings opened to the public for at least 28 days a year
• Financial institutions that have acquired the dwelling in the course of lending
• Farmhouses occupied by a qualifying working farmer
• Dwellings provided for the occupation of certain employees or partners
• Properties held by registered providers of social housing or housing co-operatives

The rental business relief is the one most owners rely on, and it is also the easiest to lose. The property must be let to genuinely unconnected third parties on a commercial basis. If a director, a shareholder or a family member occupies the property, even briefly, the relief can be denied for the whole period and the full annual charge becomes due. Letting a company flat to your own daughter at a low rent is exactly the scenario ATED was designed to catch.

A Relief Declaration Return can be filed once for all properties qualifying for the same relief, which keeps the paperwork manageable for portfolios. It must still be submitted by 30 April within the chargeable year, even though no tax is due. A property that comes into scope mid-year (for example, on acquisition) is reported within 30 days of the acquisition, or within 90 days where it is a newly built dwelling. Missing these deadlines triggers automatic late-filing penalties even where the underlying charge is nil, which is the most common and most avoidable ATED mistake.

Two SDLT surcharges stack on top of the standard rates and on top of each other: a 2% non-resident surcharge and a 5% additional-dwelling surcharge. They apply to residential property in England and Northern Ireland (Scotland and Wales run their own systems). Understanding how they combine is essential before any cross-border purchase, because together they can add 7% or more to the bill before the standard rates are even counted.

The standard residential SDLT rates for 2026 are 0% up to £125,000, 2% on the slice from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% from £925,001 to £1.5 million, and 12% above £1.5 million. These are the rates a UK-resident individual replacing their only home would pay.

The non-resident surcharge adds 2% to every band. For an individual buyer it applies where the buyer has not been present in the UK for at least 183 days in the 12 months before the purchase; a company is non-resident under its own test, broadly where it is not UK resident for Corporation Tax or where it is under the control of non-residents. The additional-dwelling surcharge adds 5% to every band where, at the end of the day of purchase, the buyer owns more than one residential property anywhere in the world and is not replacing a main residence. This rate rose from 3% to 5% on 31 October 2024. A non-resident individual buying a second home therefore pays the standard rate plus 2% plus 5%, a 7% loading across the board.

Companies face a sharper rule. Where a company or other non-natural person buys a single dwelling costing more than £500,000, a flat 17% SDLT rate can apply to the whole price, effective from 31 October 2024 (it was 15% before that date). This enveloping rate is deliberately punitive, and like ATED it can be relieved where the property is held for a genuine rental business or development. A non-resident company buying a £1.5 million London house for private family use could face £255,000 of SDLT under the 17% rate, against far less if the same house were bought personally. The SDLT and ATED enveloping rules are designed to bite together, which is why the ownership decision below has to weigh both at once.

Whether to hold UK residential property through a company depends on ATED, the SDLT surcharges, how the purchase is financed and how the eventual gain is taxed; there is no single right answer. For a private home that the owners or their family will live in, a company is usually the wrong wrapper: you risk the 17% SDLT enveloping rate on purchase and the full ATED charge every year, with no relief because the property is not let commercially. Personal ownership avoids both.

For a let property the calculus is different and genuinely finely balanced. A company holding a property as a commercial rental business can claim relief from both the 17% SDLT rate and the annual ATED charge, so neither necessarily bites. The case for a company then rests on income tax: companies deduct mortgage interest in full against rental profits, whereas individual landlords only receive a 20% tax credit on finance costs. A higher-rate or additional-rate landlord with a sizeable mortgage can be materially better off inside a company for the income years, particularly across a portfolio.

Against that, you have to weigh how gains are taxed on a sale. An individual non-resident pays capital gains tax on UK residential property at 24% (with an 18% rate on any gain falling within the basic-rate band) and must report and pay within 60 days of completion. A company pays corporation tax on the gain instead, but extracting the after-tax cash to the owners is a second taxable event, so the same profit can be taxed twice on the way out. For an owner who plans to sell and take the money personally, that double layer can outweigh the income-tax saving.

There are also non-tax factors that often decide it: the cost and availability of company buy-to-let mortgages, inheritance tax exposure (UK residential property held through an offshore company is now within the UK inheritance tax net), the administrative cost of company filings, and ATED compliance itself, which is an annual obligation even when the charge is nil. The right structure depends on the specific property, financing and family circumstances, and for non-residents and people moving to or from the UK the cross-border interactions add further layers. We model the company-versus-personal decision on fixed fees so you can see the full lifetime cost of each route, on purchase, while held and on sale, before you commit to a structure that is expensive to unwind.