Budget 2025: Property taxes

Gravita’s view

ATED was introduced back in 2012 to discourage the ownership of homes through companies. This is because it was seen as a way of avoiding Stamp Duty Land Tax (SDLT), as the property could be effectively sold by selling the shares in the company which attracts a far lower rate of Stamp Duty than the sale of land. Fortunately, there are many reliefs such as renting the property to a third party or holding the property as stock.

It has been a very successful tax and it has raised a lot of money. Interestingly of course, it has also created an annual compliance burden with many taxpayers not realising they have an obligation to file when they do not have a liability because there is a relief available to them.

Where a taxpayer is late in filing their return, the legislation could act to block them from making a claim for relief.  This is being changed so that they can claim any relief they are entitled to, even where they are filing the return late. This is good news. They will still be subject to penalties for late filing though,  and these can be pretty high.

Somewhat unsurprisingly (although frankly annoying) is that those that have filed a return but not claimed a relief that they later discover they could have done, will remain time barred from doing so in many cases. We agree that time limits are good as they both protect the taxpayer and HMRC in roughly equal measure. However, it does seem a little unfair that a taxpayer who has complied with their filing obligations and later discovers that they should have paid significantly less tax (and sometimes no tax at all) cannot change their returns, whilst a taxpayer who has not complied can get the relief.

Gravita’s view

The government is asking those owning the highest-value properties to contribute more and they estimate that fewer than 1% of the property owners will be impacted, with only 140,000 properties affected mainly in London and the southeast.

However, many of these properties, especially in London will be a far cry from the traditional “mansion” that this is supposedly aimed at, given the prices currently being charged for relatively modest properties.

There will clearly be issues around valuation and who will be responsible in determining those properties within the new charge. However, HMRC have initially proposed that the Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and after which revaluations will then be carried out every five years to determine if the surcharge applies and at what threshold. With this and the BPR/APR changes, it is a good time to get into the valuations game it would seem.