Jeff Smith
Anna Turley
Two of the Lords Commissioners of His Majesty's Treasury
This order, made by the UK Treasury, sets the annual chargeable amounts for the annual tax on enveloped dwellings, effective from April 1st, 2025.
The amounts are determined according to a table referencing the taxable value of the interest, and these amounts are indexed to reflect a 1.7% increase in the Consumer Price Index (CPI) since September 2024.
This indexation is mandated by Section 101(5) of the Finance Act 2013.
Arguments For
Fairness and inflation adjustment: The indexation ensures the tax amount keeps pace with inflation, preventing erosion of its real value and maintaining a fairer tax burden for those affected.
Predictability and transparency: The predefined formula and CPI-based indexation provide predictability and clarity for taxpayers, simplifying compliance and allowing for better financial planning.
Established legal basis: The Order operates under the explicit authority of the Finance Act 2013, providing a solid legal framework.
Government's commitment to financial stability: The government demonstrated its commitment to maintaining and monitoring the tax system.
Arguments Against
Regressive impact: Critics may argue that the tax disproportionately affects higher earners and potentially places an undue burden on individuals in the luxury housing market.
Complexity: The CPI calculation and application might unnecessarily complicate tax-related procedures.
Potential for unforeseen consequences: Changes in the CPI formula or unexpected inflation levels could lead to unintended consequences in terms of tax revenue collected.
Alternative solutions: Stakeholders could propose alternative means of adjusting tax liabilities, which may better address equity and efficiency concerns.
Citation1.
This Order may be cited as the Annual Tax on Enveloped Dwellings (Indexation of Annual Chargeable Amounts) Order 2025.
This section provides the official title for the legal document.
The order is officially titled the 'Annual Tax on Enveloped Dwellings (Indexation of Annual Chargeable Amounts) Order 2025'.
Chargeable Amounts2.
The amounts that by virtue of section 101 of the Finance Act 2013 (indexation of annual chargeable amounts) are to be the annual chargeable amounts for chargeable periods beginning on or after 1st April 2025 are determined in accordance with the following table, by reference to the taxable value of the interest on the relevant day2.
Annual chargeable amount | Taxable value of the interest on the relevant day |
|---|---|
£4,450 | More than £500,000 but not more than £1 million. |
£9,150 | More than £1 million but not more than £2 million. |
£31,050 | More than £2 million but not more than £5 million. |
£72,700 | More than £5 million but not more than £10 million. |
£145,950 | More than £10 million but not more than £20 million. |
£292,350 | More than £20 million. |
This section details the specific tax amounts for enveloped dwellings, effective from April 1, 2025.
The table outlines the annual tax amount depending on the taxable value of the interest in the property.
For example, if the taxable value is between £500,000 and £1 million, the annual charge is £4,450, while it gets progressively larger for higher values.
This section shows the signatures and roles of Jeff Smith and Anna Turley, two Lords Commissioners of His Majesty's Treasury, who authorized the order on March 18th, 2025.
Explanatory Note
(This note is not part of the Order)
This Order states the annual chargeable amounts of the annual tax on enveloped dwellings.
Section 99(4) of the Finance Act 2013 (c.29) sets out the annual chargeable amounts of tax. Section 101(5) of that Act provides for the indexation of those amounts.
This Order states the indexed amounts for chargeable periods beginning on or after 1st April 2025. Article 2 states the annual chargeable amounts by reference to the taxable value of the interest.
The annual chargeable amounts for each chargeable period beginning on or after 1st April are determined by reference to the “all items” Consumer Price Index (CPI) as published by the Office of National Statistics. Where the September CPI (in this case September 2024) is higher than it was for the previous September, the amounts of tax for the next chargeable period are increased by the same percentage increase in the CPI, rounding down to the nearest multiple of £50. The CPI rose by 1.7% in the 12 months to September 2024 (https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/september2024). As a result, the annual chargeable amounts for the chargeable periods beginning on or after 1st April 2025 have increased by comparison to the amounts for chargeable periods beginning on or after 1st April 2024, as set out in the Annual Tax on Enveloped Dwellings (Indexation of Annual Chargeable Amounts) Order 2024 (S.I. 2024/379).
A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and relates to routine changes following a predetermined indexation formula.
The explanatory note clarifies that the order specifies the annual tax amounts for enveloped dwellings.
It explains how these amounts are determined according to a formula based on the Consumer Price Index (CPI), with the indexation formula sourced from the Finance Act 2013.
The note further states that the 1.7% CPI increase from September 2024 drove the increase in tax rates for the relevant period.
Finally, it notes that a formal tax impact note is not required given this is a routine indexation based on predefined policy.
Latest Legislation
The Power to Award Degrees etc. (National Film and Television School (The)) (Amendment) Order 2025
17th Apr 25
The Hornsea Four Offshore Wind Farm (Amendment) Order 2025
15th Apr 25
The Heckington Fen Solar Park (Correction) Order 2025
15th Apr 25
The Power to Award Degrees etc. (ICMP Management Limited) (Amendment) Order 2025
14th Apr 25
The National Grid (Bramford to Twinstead Reinforcement) (Correction) Order 2025
14th Apr 25