Purchasing property through a corporate structure has become increasingly unattractive as Government data reveals a decline in revenue from the Annual Tax for Enveloped Dwellings (ATED,) a property investment firm claims.

The tax was introduced in 2012 to discourage the use of companies to buy properties for owner occupation and included a 15% slab-style Stamp Duty payment and an annual tax.

It was initially imposed on properties above £2m, with the threshold being lowered to £1m in 2015-16 and to £500,000 in the 2016-17 tax year.

The figures show overall ATED receipts fell for the first time in the last tax year from £178m to £175m.

This is despite an increase in rates of 50% across the board in 2015-16 and the recent extension to include properties above £500k

Actual numbers of enveloped dwellings have also fallen. Over £2m, where a comparison can be made with when the tax was first imposed, properties held in corporate structures decreased 22%. They have also fallen 10% since the previous year

Only 7,300 properties are now recorded as being held in corporate structures for owner occupation, representing just 0.03% of all privately-owned units in England and Wales

London Central Portfolio (LCP), said the Government also “heavily overestimated” the number of owner-occupied enveloped properties between £500,000 and £2m, collecting just £21m, only a quarter of the projected £90m tax take.

A spokesman said the drop was less to do with buyers avoiding the changing ATED threshold and more to do with the higher tax charges.

Naomi Heaton, chief executive of LCP, said: “This first sign of falling revenue may come as a surprise to the Government who significantly overestimate, by three times, the number of owner-occupied properties held in corporate wrappers at the sub-£2m end of the market.

“With high establishment and running costs, the use of company structures has typically not been considered an option at these price-points. As a result, the Government’s projected windfall of £90m from properties between £500,000 and £2m has failed to materialise with under a quarter of this collected, at just £21m.

“As a whole, the Government has made considerable progress in achieving its objectives of encouraging owner occupiers not to hold through company structures. Whilst a tax take of £175m in 2016-17 is considerably higher than the £75m estimated back in 2012, there is now the real prospect of falling revenues.

“However, in 2018-19, 5 years after the scheme was implemented, revaluations will be required for all properties originally caught by ATED. This may find a number of properties moving into higher value tax brackets, providing a further windfall for the Exchequer. In the meantime, chancellor Philip Hammond may take a leaf out of Osborne’s book, who increased ATED by 50% in the 2015 Autumn Budget.”

Tax experts are also warning that the way the ATED charge is calculated is changing for the 2018/2019 tax year as it is increasing with inflation and will be based on property values from April 2017 rather than 2012 previously, meaning those holding properties that have increased in value to £500,000 could get hit without realising.

Alex Foster, of accountancy firm RSM, said: “With the house price index showing an increase in house prices over the period for April 2012 to April 2017, it is essential that valuations are obtained as soon as possible.

“Properties that were previously worth less than £500,000 and were not subject to ATED may now fall within the ATED regime for the first time. If caught, the deadline for reporting and payment is 30 April 2018 – a month into the assessment year unlike most other taxes where they are due after the relevant event/period.

“HMRC advises that owners can either work out the value [of the property]  themselves or use a professional valuer.”