The Annual Tax on Enveloped Dwellings starts every chargeable period with a value and a date. The value places the dwelling in one of six bands (or below the £500,000 floor, in which case the charge is nil). The date determines which point-in-time figure applies. Get either wrong and the return is wrong, with the late-payment and Schedule 24 penalty machinery attaching from the original 30 April due date.

The next five-yearly revaluation is 1 April 2027. That date will drive ATED charges from chargeable period 2028/29 onwards and may move any number of properties across band boundaries, particularly in prime central London where capital values have moved materially since the previous 1 April 2022 anchor. This page walks through how the valuation rules work, when alternative dates apply, what the substantial-transaction triggers do, how to use the Pre-Return Banding Check, and what to start doing now to prepare for the 2027 cut-over.

The Five-Yearly Cycle: 2012, 2017, 2022, 2027 and Beyond

ATED works on a five-yearly revaluation cycle. The chargeable value is the open-market value of the dwelling on the most recent valuation date, used for the five chargeable periods that follow. Four valuation dates have applied since ATED began:

Valuation dateUsed for chargeable periods
1 April 20122013/14 to 2017/18
1 April 20172018/19 to 2022/23
1 April 20222023/24 to 2027/28
1 April 20272028/29 to 2032/33 (next cycle)

For the current chargeable period 2026/27 (1 April 2026 to 31 March 2027), the figure that goes on the return is the 1 April 2022 open-market value of the dwelling. The 2027/28 return, filed by 30 April 2027, continues to use the 1 April 2022 value because that period is the last year of the present cycle. Only from 2028/29 onwards, with the return due by 30 April 2028, does the 1 April 2027 figure replace it.

Sitting between the cycles is a long-running tension between the static valuation date and the moving market. A flat valued at £2 million on 1 April 2022 continues to attract the 2026/27 charge in the £2m to £5m band (£32,200) even if the same flat would sell for £2.5 million today. That stability is intentional; the regime needs a fixed reference point so owners can plan and HMRC can administer. The 2027 revaluation is the moment when market movement catches up.

The Acquisition-Date Interim Rule

Where the dwelling was acquired after the most recent five-yearly valuation date, the acquisition value applies in place of the five-yearly value for the rest of the current cycle. This is the acquisition-date interim rule, and it has three practical consequences.

First, the acquisition value is the consideration paid (or the open-market value where the acquisition was from a connected party at less than market value). The reference is to the value of the dwelling on the acquisition date, fixed at that date.

Second, the acquisition value runs only until the next five-yearly revaluation. A dwelling acquired on 30 June 2024 for £1.4 million uses £1.4 million for ATED purposes for chargeable periods 2024/25, 2025/26, 2026/27 and 2027/28. From 2028/29, the 1 April 2027 valuation replaces the acquisition value, even though the dwelling has only been held for under three years on the 2027 date. The acquisition value is a placeholder, not a long-running anchor.

Third, the first-year ATED charge is apportioned by the number of days the dwelling was held in the chargeable period of acquisition. A 30 June 2024 acquisition produces an ATED charge for 275 days of the 2024/25 chargeable period (30 June 2024 to 31 March 2025 inclusive), at 275/365 of the full-year band rate. The return is due within 30 days of acquisition (or 90 days for a newly-built dwelling), separate from the standard 30 April annual deadline.

What 1 April 2027 Will Actually Demand

Three changes flow from the 1 April 2027 revaluation date.

One: every dwelling currently within ATED scope (or with a residential value approaching £500,000) needs a fresh open-market value at 1 April 2027. The new figure goes on the 2028/29 return filed by 30 April 2028 and applies for the five years of the next cycle.

Two: properties that have moved across a band boundary since 1 April 2022 will see a different annual charge. The 2026/27 bands run at £4,600, £9,450, £32,200, £75,450, £151,450 and £303,450; the 2028/29 figures will be CPI-indexed from those (HMRC publishes the next-year table each November). A property moving from £4.9 million at 2022 to £5.3 million at 2027 jumps from the £2m to £5m band to the £5m to £10m band, an increase of roughly £43,000 a year before indexation.

Three: properties that have crossed the £500,000 entry threshold (typically through capital growth or a renovation) will be within ATED for the first time. The first-time return is due by 30 April 2028 and any rental-letting or developer relief must be claimed on it; no claim, no relief.

The flip side is properties that have moved below £500,000 (rare but possible, e.g. through a substantial disposal of part of the building reducing the dwelling element). Those properties drop out of ATED scope, with the final return filed by 30 April 2027 for the 2027/28 period.

Substantial Acquisitions and Substantial Disposals: The £40,000 Triggers

Between the five-yearly revaluation dates, two additional events can create a new valuation date for the dwelling. Both turn on a £40,000 threshold.

Substantial acquisition

An acquisition of part of the property (an adjoining flat, a freehold piece, an additional lease interest) is "substantial" if the consideration is £40,000 or more. The substantial acquisition creates a new ATED valuation date as at the date of the acquisition, and the value of the whole property (including the newly-acquired part) is reassessed at that point.

The new valuation runs until the next five-yearly revaluation. A dwelling already within ATED at £1.8 million (1 April 2022 value) that has an adjoining flat acquired for £600,000 on 15 March 2026 sees a fresh ATED valuation of the combined property at 15 March 2026. The new figure, perhaps £2.5 million, applies for the rest of the current cycle (until 31 March 2028) before the 1 April 2027 five-yearly revaluation supersedes it.

Substantial disposal

A disposal of part of the property is "substantial" if the value of the part disposed of is £40,000 or more (the relevant figure is the value of the part, not necessarily the price). Where the disposal is substantial, the remaining property is re-valued at the disposal date and that figure replaces the previous valuation for the rest of the current cycle.

The mechanism prevents an owner stripping a £900,000 building down to a £490,000 residential element to escape ATED on paper without HMRC seeing the figures at the moment of the change. The £40,000 floor catches the substantive changes; minor adjustments such as the sale of a garage strip are below the threshold.

Connected-party transactions

Where the substantial acquisition or substantial disposal is between connected parties, the relevant figure is market value, not the consideration that changed hands. This mirrors the SDLT market-value substitution under s.53 FA 2003 and is the standard anti-avoidance discipline for related-party transactions.

The Pre-Return Banding Check for Near-Boundary Values

The Pre-Return Banding Check is HMRC's free pre-emptive service for owners whose valuation puts the property within 10% of a band boundary. It is the most useful single piece of ATED administrative machinery and consistently under-used.

The PRBC works as follows:

  1. The owner submits the request via the ATED Pre-Return Banding Check service on gov.uk before the 30 April return deadline.
  2. The request includes the valuation figure, the methodology, the comparable evidence (sales of similar properties in the area, RICS Red Book report where one exists, recent local comparables) and the basis on which the owner has reached the figure.
  3. HMRC reviews the package and returns its view on the band the property falls into. Where HMRC agrees, the banding is locked for the chargeable period. Where HMRC disagrees, the owner has the opportunity to revise before the return is filed.

The PRBC is not statutorily binding. HMRC could in principle revisit the position later if material new facts emerge. In practice, a PRBC backed by reasonable evidence is rarely revisited.

The PRBC is most worth doing for properties within 10% of:

  • The £500,000 entry threshold (where the difference is the whole charge versus nil).
  • The £2m boundary (band step from £9,450 to £32,200 in 2026/27, a £22,750 annual difference).
  • The £5m boundary (band step from £32,200 to £75,450, a £43,250 annual difference).
  • The £10m boundary (band step from £75,450 to £151,450, a £76,000 annual difference).
  • The £20m boundary (band step from £151,450 to £303,450, a £152,000 annual difference).

At the £5m and above boundaries, the cost of getting the band wrong for a single year exceeds the cost of a RICS Red Book valuation by an order of magnitude. The PRBC is the natural follow-on.

Who to Instruct as a Valuer and What Evidence to Hold

For properties comfortably within a band (more than 10% from any boundary), self-valuation backed by recent comparable sales evidence is usually defensible. The discipline is to have the evidence on the file before the return is filed: three to five recent local comparable sales, the asking-price-to-sold-price ratio for the area, and a one-page note explaining the figure.

For properties near a boundary, in unusual properties (mews, period freeholds, large structural non-standard dwellings), or in markets where comparable evidence is thin, the recommendation is a RICS Red Book valuation by a chartered surveyor. The Red Book methodology gives HMRC a known reference point and significantly reduces enquiry risk.

The valuer should be briefed specifically on the ATED purpose, asked for an open-market value at the relevant date (the most recent five-yearly date or the acquisition date or a substantial-transaction date, as applicable), and instructed to set out the comparable evidence and the reasoning. The fee for a single high-value residential dwelling typically runs from £750 to £3,000, depending on complexity. On a £4.9 million flat near the £5m boundary, the saving from securing the lower band is £43,250 a year for five years (£216,250 across the cycle, before indexation); the valuation fee is rounding error against that.

Worked Example: A £4.9 Million Flat Crossing £5 Million at 2027

A corporate-held two-bedroom flat in Knightsbridge was valued at £4.9 million on 1 April 2022. The dwelling is let on a commercial AST to an unconnected tenant; the ATED charge each year is reduced to nil by Property Rental Business Relief under section 133 FA 2013, but the £4.9m figure still drives which band is reported on the Relief Declaration Return.

Capital values in prime central London have moved between 1 April 2022 and the run-up to 1 April 2027. The owner's surveyor estimates the 1 April 2027 open-market value at £5.3 million.

From chargeable period 2028/29 onwards, the dwelling sits in the £5m to £10m band. The 2026/27 charge at that band is £75,450; the 2028/29 figure will be CPI-indexed but in real terms moves the property up by around £43,000 a year compared with the £2m to £5m band. While the rental relief continues to reduce the charge to nil if the dwelling remains let commercially, two consequences flow:

  • If the relief is lost for any portion of the year (a connected-person occupation for three months), the apportioned charge runs at the higher 2028/29 band rate, materially higher than the 2026/27 position.
  • If the dwelling is sold or dis-enveloped during the next cycle, the question of historical compliance is judged against the 2027-based band, not the 2022-based band. A historically careless apportionment looks worse against the higher band on enquiry.

The practical posture: brief the surveyor to deliver an open-market value at 1 April 2027 before the return for 2028/29 is filed; lodge a PRBC if the surveyor's figure sits within 10% of £5 million; and refresh the apportionment workings (if relevant) at the same time. Cost of the package: £2,000 to £4,000; downside protection: tens of thousands of pounds a year if the relief position changes.

What Happens If HMRC Disagrees With Your Valuation

HMRC writes a Type 2 letter where its data indicates the valuation on the return is materially below market. The Type 2 letter is distinct from the Type 1 letter (which questions whether ATED applies at all) and is the standard opening of a valuation enquiry.

The Type 2 letter typically asks the owner to:

  1. Confirm the valuation methodology used (self-valuation, comparable sales, formal RICS valuation).
  2. Provide the supporting evidence (comparables, valuer report, PRBC where one was lodged).
  3. Respond within a stated period, usually 30 days.

HMRC's view is often supported by Valuation Office Agency comparables and Land Registry transaction data for similar properties. The owner's response is to either agree the higher figure (and file an amended return paying any additional charge plus interest), produce evidence in support of the original figure, or seek a middle position.

Where the dispute cannot be resolved, HMRC issues a closure notice. The owner has 30 days to appeal to the First-tier Tribunal. Tribunal appeals on ATED valuation are rare in the public record but follow the standard valuation-dispute pattern (each side instructs a surveyor, the tribunal hears the comparables and reaches a figure).

The penalty risk attaches not to the valuation dispute itself but to whether the original return was careless or worse. Schedule 24 FA 2007 penalties apply at 0% to 30% of the additional ATED for careless behaviour, 20% to 70% for deliberate, and 30% to 100% for deliberate-and-concealed. A reasoned valuation with comparable evidence on file (and ideally a PRBC) is rarely treated as careless even when HMRC's preferred figure differs.

How This Page Sits Alongside Sibling Pages

The valuation rules are upstream of every other ATED mechanic. The wider guidance on the site connects through:

Authority Sources

The valuation date is the silent driver of every ATED return. Get it right, hold the evidence, and the rest of the regime works as designed; get it wrong, and the dispute lives on for the rest of the cycle. The 2027 revaluation is the natural moment to refresh the position for the next five years.