Flooding relief for SA filing, ATED expanded, Trivial Benefits

If you or your clients have been struggling to file SA tax returns due to disruption caused by flooding or other extreme weather conditions, we have some good news for you. Looking ahead to April 2016; you need to warn clients about the expansion of the ATED charge, and explain the new rules for trivial benefits.

This is an extract from our topical tax tips newsletter dated 28 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

ATED expanded 
The annual tax on enveloped dwellings (ATED) was restricted to properties worth over £2 million when it was introduced on 1 April 2013. From 1 April 2016 it will apply to residential properties worth over £500,000 which are owned by non-natural persons (companies and mixed or corporate partnerships). 
  
According Land Registry data collected in November 2015, the average price of a home in London is £506,724. If your client owns residential property through a company (or another vehicle), you need to check whether the ATED applies. 
  
Note the relevant value for ATED is not the value as at 1 April 2016, but the value at 1 April 2012. If the property was not held by the current owner on 1 April 2012, you must use the valuation at the date of acquisition. If you are not sure about the value at 1 April 2012 you can ask HMRC to undertake a pre-return banding check. 
  
However, you can't ask for a banding check if the ATED charge will be reduced to nil by one of the reliefs. This is typical muddled thinking by HMRC. They provide a mechanism to make life easier (valuation check) but block the use of it if there is no tax to pay. HMRC doesn't consider the cost of completing the ATED return to claim the relief. 
  
Don't overlook the need to submit an ATED return. Where the property falls within the ATED regime because of its value and ownership, an ATED return must be submitted. If a relief eliminates the ATED charge you must submit a relief declaration return - there is a different relief declaration form for each type of relief claimed. 
  
The ATED return must normally be filed by 30 April within the year to which the charge relates: 30 April 2016 for 2016/17. However, there is generally an extension to 1 October for properties which fall within ATED for the first time due to a new banding. The Gov.uk website hasn't been updated on this point yet. 
  
There are penalties for late submission of ATED returns which apply the same level of penalties as for late submission of self-assessment tax returns.
 
This is an extract from our topical tax tips newsletter dated 28 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>