If you're buying a rental property and weighing up whether to hold it personally or through a company, you've almost certainly come across the term SPV. It's the structure most landlords now use to buy buy-to-let property through a limited company, and lenders, accountants and solicitors will expect you to know what it means.
This guide explains what an SPV is, how to set one up correctly, what to expect from SPV mortgages, and how the tax stacks up against owning in your own name. We've written it for landlords building or moving a portfolio, and for anyone running a limited company who wants to hold property cleanly.
We'll keep the figures dated and sourced, walk through an illustrative example, and flag the costs people forget. The right answer depends on your numbers, so treat this as a map, not a recommendation to incorporate.
What is an SPV and why do landlords use one?
An SPV, or special purpose vehicle, is simply a limited company set up to do one job: to buy, hold and let property. It's an ordinary company registered at Companies House, but it's restricted to property activity and nothing else.
That single-purpose nature is the whole point. Buy-to-let lenders prefer it because the company has no trading history, no unrelated debts and no messy accounts to underwrite. Underwriting is faster and cleaner when a company exists only to own rental property.
The other reason landlords use an SPV is tax. Since the phasing in of the Section 24 finance cost rules, individual landlords can no longer deduct mortgage interest from rental income in the normal way. Instead, relief is restricted to a basic-rate tax reduction. Companies aren't caught by Section 24, so an SPV deducts mortgage interest as a business expense before tax. For a higher-rate landlord with a mortgage, that difference can be significant.
It isn't a free win, though. Companies face their own costs, their own taxes on getting money out, and extra admin. We'll get to all of it.
How do you set up a property SPV?
Setting up an SPV is the same process as forming any limited company. You can do it directly through Companies House.
The core steps are:
- Choose a company name that isn't already taken and doesn't use a restricted word.
- Appoint at least one director and issue shares to the shareholders (often just you, or you and a spouse or partner).
- Register a SIC code that describes property letting, not trading (see the next section, it matters for your mortgage).
- Provide a registered office address and details of people with significant control.
- Pay the incorporation fee. Registering a company online with Companies House costs £100 (current fee, from 1 February 2026).
Once incorporated, the company will need a business bank account, and you'll have ongoing obligations: annual accounts, a confirmation statement, and a Corporation Tax return. Many landlords underestimate this side of it. If you'd rather not handle filings and deadlines yourself, our company secretarial services cover the statutory admin, and our corporation tax services handle the company's tax return.
Which SIC code should a property SPV use?
A SIC code is the standard industrial classification code that tells Companies House what your company does. For a property SPV, this is not a box-ticking detail. Lenders check it.
Most buy-to-let SPVs use 68209, "other letting and operating of own or leased real estate". That's the code that signals a landlording company to a mortgage lender.
The code to avoid for a standard buy-to-let SPV is 68100, "buying and selling of own real estate". That one signals property trading or flipping, and many buy-to-let lenders will decline an application from a company registered under it. If you genuinely intend to trade and develop, that's a different conversation, and a different structure.
You can hold more than one relevant property SIC code, but keep the company purely to property activity. As soon as an SPV starts doing unrelated trading, lenders tend to treat it as a trading company, which defeats the point.
How do SPV buy-to-let mortgages work?
SPV mortgages are a well-established part of the buy-to-let market, and the number of lenders offering them has grown. They work differently from a residential mortgage in a few important ways.
- Deposits are larger. Expect to put down a meaningful deposit, often more than you would on a residential purchase. Loan-to-value limits on limited company buy-to-let tend to be tighter.
- Personal guarantees are normal. The mortgage is in the company's name, but lenders usually require directors to give a personal guarantee. The "limited liability" of the company does not shield you from the borrowing in practice.
- Affordability is assessed on rent. Lenders use an interest coverage ratio, testing whether the expected rent comfortably covers the mortgage interest at a stressed rate.
- The company must fit the lender's criteria. A clean SPV with the right SIC code, recently formed and property-only, is the easiest profile to place.
Rates on limited company buy-to-let products have historically been a little higher than equivalent personal buy-to-let deals, and there are arrangement fees to factor in. Always compare the total cost of borrowing, not just the headline rate. Mortgage advice is a regulated activity, so speak to a qualified mortgage broker for product recommendations. We can work alongside yours on the numbers.
How is an SPV taxed compared with personal ownership?
This is the heart of the decision. The two structures are taxed on completely different bases.
A personal landlord pays Income Tax on rental profit at their marginal rate, and their mortgage interest only attracts a basic-rate tax reduction under Section 24.
An SPV pays Corporation Tax on its rental profit, after deducting mortgage interest in full. But the cash inside the company isn't yours yet. To spend it personally, you usually take dividends, which are taxed again on you. That second layer is the trade-off people forget.
Here are the headline rates that drive the comparison, all for the current year.
| Tax | Rate | Tax year | Applies to |
|---|---|---|---|
| Corporation Tax (small profits rate) | 19% | FY2025 | Company profits up to £50,000 |
| Corporation Tax (main rate) | 25% | FY2025 | Company profits over £250,000 |
| Dividend ordinary (basic) rate | 8.75% | 2025/26 | Dividends in the basic-rate band |
| Dividend upper (higher) rate | 33.75% | 2025/26 | Dividends in the higher-rate band |
| Dividend allowance | £500 | 2025/26 | Tax-free dividends per person |
| Income Tax higher rate | 40% | 2025/26 | Personal income £50,271 to £125,140 |
Profits between £50,000 and £250,000 are taxed using Marginal Relief, which tapers the effective rate between 19% and 25%. The marginal relief limits are £50,000 and £250,000, divided by the number of associated companies.
The practical takeaway: an SPV tends to win for higher-rate or additional-rate landlords with mortgaged property who reinvest profits to grow the portfolio. It often looks less attractive for a basic-rate taxpayer with one unmortgaged property who wants the income in their pocket now. You can model your own corporation tax position with our Corporation Tax services team, and our landlords page sets out how we support property businesses.
Illustrative example: tax on rental profit in an SPV
Illustrative example. Priya sets up an SPV that owns one buy-to-let flat. In 2025/26 it receives £30,000 in rent. The mortgage interest is £12,000 and other allowable costs (letting fees, insurance, repairs, accountancy) are £3,000.
Step 1, the company's taxable profit:
- Rental income: £30,000
- Less mortgage interest: £12,000
- Less other costs: £3,000
- Taxable profit: £15,000
Step 2, Corporation Tax. Profit is below £50,000, so the small profits rate of 19% applies:
- £15,000 x 19% = £2,850 Corporation Tax
- Profit left in the company after tax: £15,000 minus £2,850 = £12,150
If Priya leaves that £12,150 in the company to save towards the next deposit, no further tax falls due now. The SPV grows its cash.
Step 3, if instead Priya wants the money personally and takes it as a dividend. Assume she's already a higher-rate taxpayer from her main job, so the dividend sits in the higher-rate band. After her £500 dividend allowance, the rest is taxed at the dividend upper rate of 33.75%:
- Dividend: £12,150
- Less dividend allowance: £500
- Taxable dividend: £11,650
- £11,650 x 33.75% = £3,931.88 dividend tax
So on £15,000 of rental profit she'd extracted fully, the combined tax is £2,850 plus £3,931.88, roughly £6,782, before counting the value of any cash she chooses to retain in the company instead.
This is why the SPV advantage is strongest when you reinvest rather than draw everything out. The figures are illustrative and rounded for clarity. Your own position depends on your other income, how you extract funds, and your wider tax planning.
What about Stamp Duty and ATED?
Two property-specific taxes catch out new SPV landlords.
Stamp Duty Land Tax (SDLT). A company buying residential property in England or Northern Ireland pays the higher rates for additional dwellings. From 31 October 2024, those higher rates start at 5% on the first slice of the price and rise in bands. There's no first-property exemption for a company, so the surcharge applies from the first purchase. And for a single dwelling bought by a company for more than £500,000, a flat 17% rate can apply unless a relief is available.
The Annual Tax on Enveloped Dwellings (ATED). This is an annual charge that mainly affects companies owning UK residential property worth more than £500,000. Crucially, there's a relief for properties run as a genuine commercial letting business to unconnected tenants, which covers most ordinary buy-to-let SPVs. You usually still have to file an ATED relief declaration return each year to claim it, even when no tax is due. Don't ignore it, the filing obligation is separate from the charge.
There's also the cost of moving existing personal properties into an SPV. That's a sale to the company at market value, which can trigger SDLT for the company and Capital Gains Tax for you personally. It's rarely as simple as "transferring" a property, and it needs proper advice first.
Should you buy property through an SPV? A decision checklist
Run through these questions before you incorporate:
- Are you a higher or additional-rate taxpayer? If yes, and the property is mortgaged, the Section 24 saving inside a company is more likely to outweigh the extra cost.
- Will you reinvest or draw the income? Reinvesting profits to grow a portfolio favours an SPV. Needing the rent as personal income now reduces the benefit, because you pay dividend tax on the way out.
- Are you buying for the long term? Company structures suit holding and growing. Frequent buying and selling brings different tax and lender issues.
- Can you handle the admin and cost? Annual accounts, a Corporation Tax return, a confirmation statement and an accountant's fee are ongoing. A single low-value property may not justify it.
- Are you moving existing property in? Tread carefully. SDLT and CGT can make incorporating an existing portfolio expensive.
If you answered yes to the first three and you're comfortable with the fourth, an SPV is worth modelling properly with an accountant before you commit.
FAQs
Is it cheaper to buy property through a limited company?
Not automatically. A company avoids the Section 24 restriction on mortgage interest and pays Corporation Tax rather than Income Tax on profit, which can be cheaper for higher-rate landlords. But you pay dividend tax to take money out, and you carry extra running costs. It's cheaper in some situations, not all. Model your own numbers first.
What SIC code do I need for a property SPV?
Most buy-to-let SPVs use 68209, "other letting and operating of own or leased real estate". Avoid 68100, "buying and selling of own real estate", for a standard buy-to-let, because many lenders associate it with property trading and may decline the mortgage.
Can I get a buy-to-let mortgage through an SPV?
Yes. Limited company buy-to-let mortgages are widely available, and many lenders prefer a clean, property-only SPV. Expect a larger deposit than a residential mortgage, and most lenders will ask directors for a personal guarantee. Use a regulated mortgage broker for product advice.
Do I pay Stamp Duty if my company buys property?
Yes. A company pays the higher rates for additional dwellings on residential property in England and Northern Ireland, starting at 5% from 31 October 2024, with no first-property exemption. A single residential dwelling bought for over £500,000 may attract a flat 17% rate unless a relief applies.
Does my SPV have to pay the Annual Tax on Enveloped Dwellings?
Usually not, if the property is let commercially to unconnected tenants and is worth over £500,000, because a relief applies. But you typically still need to file an ATED relief declaration return each year to claim the relief, even when no tax is payable.
Can I move my existing buy-to-let into an SPV?
You can, but it's treated as a sale to the company at market value. That can trigger SDLT for the company and Capital Gains Tax for you. Incorporating an existing portfolio is a planning exercise that needs advice before you act, not a simple transfer.
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Key takeaways
- An SPV is a property-only limited company. Lenders like the clean structure, and companies escape the Section 24 mortgage interest restriction.
- Register the right SIC code (usually 68209). The wrong one can sink your mortgage application.
- Tax is two-layered: Corporation Tax on profit, then dividend tax when you draw funds out. The SPV wins most clearly when you reinvest.
- Watch SDLT (higher rates from the first purchase) and the ATED filing if a property is worth over £500,000.
Thinking about buying your next property through an SPV? Book a call with a Zmartly accountant and we'll model the tax on your actual numbers, then handle the company accounts and Corporation Tax so you can focus on the portfolio. See our limited companies page to get started.
