The Annual Tax on Enveloped Dwellings (‘ATED’) is a yearly tax mainly payable by non-natural persons (i.e. companies) that own UK residential property valued at over £500,000.

The government has issued the Annual Tax on Enveloped Dwellings (Indexation of Annual Chargeable Amounts) Order 2026 (SI 2026/156), which updates the annual ATED charges for periods beginning on or after 1 April 2026. The Order came into force on 24 February 2026 and fulfils the statutory requirement in s.101(5) Finance Act 2013 to uprate the annual charges in line with inflation.

ATED figures rise

The revised charges reflect a 3.8% increase, drawn up from the September 2025 consumer price index.

The new annual charges will range from:

· £4,600 for dwellings valued over £500,000 up to £1 million, through to

· £303,450 for dwellings valued over £20 million.

This charge may affect those who hold residential property through companies, whether for historic structuring reasons, privacy, or as a nominee purchaser following enfranchisement.

Relationship to SDLT

Although ATED is separate from Stamp Duty Land Tax (SDLT), these recently announced increases to ATED together with the recently announced ‘mansion tax’ on homes worth over £2 million may be seen as part of the wider policy landscape on property taxation.

ATED was initially brought into play in April 2013 as part of a package of anti-avoidance measures aimed at stopping the practice of “enveloping” residential property in a company to avoid SDLT on sale. Instead of selling the property, owners would sell shares in the company.

By increasing ATED charges, the government signals that enveloped structures are discouraged unless there is a clear commercial purpose and property‑related taxes will continue to be indexed and, in practice, rise annually.

Specialist input should always be taken before making any tax-related decisions; it’s worth seeking advice from an accountant or tax adviser to avoid being hit with late fees for new SDLT charges.