Farm businesses held in a company structure are being advised that a property re-valuation could result in tax savings, but action should be taken now.
The next Annual Tax on Enveloped Dwellings (ATED) re-valuation date is scheduled for 1 April 2022.
Property consultancy Fisher German is advising farm businesses held in a company to commission an up-to-date property valuation.
ATED is an annual tax payable by companies which own residential property in the UK with a value of £500,000 or above.
With farmhouses often having a value in excess of this, especially with recent price increases, there is a potential liability for many to be caught by the tax.
Currently, residential properties valued from £500,000 up to £1m attract an annual charge of £3,700, and for those between £1m and £2m the charge is £7,500.
Tom Lockton, of Fisher German’s valuation team said that for properties with a valuation on the cusp of two bands, a reliable, up-to-date valuation could result in significant savings.
“Furthermore, there are a number of reliefs and exemptions available, such as where a farmhouse is occupied by farm workers or let to a third party on a commercial basis.
“For farms, ATED is only applicable to the apportioned value of the residential element, not land, buildings or woodland," he explained.
"Thus an accurate valuation is vital to ensure that no tax is unnecessarily paid, and no penalties are incurred for undervaluing.”
