Agents advised to alert landlords over tax changes

The Association of Residential Letting Agents is advising agents to alert clients to changes to two areas of tax on property holdings: Annual Tax on Enveloped Dwellings (ATED) and Capital Gains Tax (CGT) for Non Resident landlords.

It says landlord clients of agents may need to review their portfolios before property tax changes come into force.

The Annual Tax on Enveloped Dwellings (ATED) applies where UK residential property is owned by a company, a partnership with a corporate partner or a collective investment scheme. ATED, formerly Annual Residential Property Tax, is an annual charge on UK residential property. 

From April 1 this year ATED has applied to property valued over £1m and from April 1 2016 this threshold reduces to £500,000.

From next April there will be an ATED charge of £3,500 per year for a property worth £500,000 to £999,999.

Prior to last month only UK residents paid Capital Gains Tax on UK property at a current top rate of 28% tax on investment properties, and non-residents could sell UK property at a gain without paying any UK tax. 

However, since April 6 non-residents have been liable to pay CGT on the disposal of a UK residential property. The charge will apply to individuals, partners in partnership, trustees of trusts and close companies.