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Government plans succeed: the number of company owned homes is falling

Recently published Government statistics for the Annual Tax for Enveloped Dwellings (ATED) have demonstrated the success of the policy since its implementation in 2013. Introduced by George Osborne, the stated aim was to discourage owner occupiers from making significant Stamp Duty savings by buying residential property in corporate wrappers (otherwise known as Non-Natural Persons or NNPs). It was also a way to encourage people to invest in their ‘own names’ rather than using the anonymity of a company structure

To dis-incentivise such corporate purchases and at the same time raise much needed revenue, the Government introduced hefty tax charges on properties held in this way. This included the introduction of a 15% slab-style Stamp Duty payment and the ATED which increases by price bands. These were increased by around 50% in 2014 Autumn Statement to as much as £218,200 p.a.

The tax was initially imposed on properties above £2m, with the liable value being lowered to £1m in the last tax year (2015-16). Properties worth over £500,000 are liable from this year (2016-17) and this will be recorded in next year’s statistics.

Naomi Heaton, CEO of LCP, comments: “It must be welcome news for the Exchequer that, three years on, the ATED tax has generated £394m. Significant rate increases of around 50% were largely responsible for this, generating a £178m windfall in 2015-16, a 53% increase over the previous year.”

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