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£3m fall in tax revenue after ATED rises discourage owner-occupied corporate properties

05 April 2018

Numbers of owner-occupied properties in corporate structures have fallen, according to government figures for the Annual Tax for Enveloped Dwellings (ATED).

Introduced in 2012, and figures for the tax year 2016-17 showed a reduced figure for the first time, according to London Central Portfolio (LCP).

The tax was reportedly introduced to discourage companies buying properties for their own use and involves a 15% "slab-style" Stamp Duty charge plus an annual tax.

Initially imposed for properties worth more than £2m, this figure has been reduced and now stands at £500,000.

Annual tax can now be as much as £220,50 per annum, according to the value of the property in question.

Figures for the tax year 2016-17 showed a fall from £178m for the previous year to £175m, despite a 50% increase in ATED rates in 2015-16, according to LCP.

The £3m fall included a significant reduction in the £5m to £10m property bracket of 10%.

Government estimates for the £500,000 to £2m property bracket had projected revenues of £90m, but were shown to be heavily overestimated with the actual figure reaching just £21m.

Numbers of enveloped dwellings worth more than £2m have also fallen 22% for properties worth over £2m since 2012.

LCP chief executive officer Naomi Heaton said the government was achieving its objectives to encourage "owner occupiers to hold properties in their own names or drop them out of corporate vehicles.

"According to the latest data, just 7,300 properties are now liable to the charge, representing only 0.03% of all privately owned property in England and Wales," she said.

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