Having worked with landlords and property investors for many years, a frequently asked question is 'should I operate as an SPV or not'. So, we wrote this article to help you understand whether this is a good option for you.
If you are a landlord or property investor managing buy-to-let properties, you may be paying more tax than necessary by operating in your name. A growing number of property investors are now setting up Special Purpose Vehicles (SPVs), also known as Property Limited Companies, as a more tax-efficient way to run their portfolios.
We work with landlords and property investors across the East Midlands, London and throughout the UK to help them understand the financial and long-term benefits of setting up an SPV.
What is a Special Purpose Vehicle (SPV)?
An SPV is a limited company created solely for the purpose of holding and managing property. It is registered with Companies House and identified by specific SIC codes (such as 68100 or 68209). Unlike a personal name portfolio, an SPV is a separate legal entity, which provides advantages in tax planning, risk management and succession planning.
Why consider an SPV?
Setting up an SPV can provide a range of advantages, particularly if you are a higher-rate taxpayer or planning to grow your portfolio. Some of the key benefits include:
Tax efficiency - Rental income earned personally is added to your total income, which could push you into a higher tax band. An SPV pays Corporation Tax on its profits, and mortgage interest is fully deductible. You can choose to retain profits or pay yourself dividends in a tax-efficient way, potentially sharing these with family members.
Improved access to finance - Many lenders now offer buy-to-let mortgages specifically for SPVs, often with competitive terms. Because the SPV is ring-fenced from your personal finances, lenders view this structure as more stable and lower risk.
Asset protection and risk limitation - Since an SPV is a separate legal entity, it offers a layer of protection between your property portfolio and your personal assets.
Inheritance tax planning - By structuring share ownership appropriately, you can plan more effectively for succession. Passing on shares is often simpler than transferring property ownership outright.
Portfolio growth potential - SPVs make it easier to reinvest profits and scale up, offering a more streamlined way to manage multiple properties under one legal structure.
Other points to consider
Before setting up an SPV, it is essential to weigh the potential drawbacks:
- There are costs to incorporate and run the company, including accountancy fees and annual filing requirements.
- If you already own property personally, transferring it to an SPV may trigger Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT)
- You may pay tax twice, once at the company level and again when withdrawing dividends.
- SPV mortgage interest rates may be slightly higher, and fewer lenders are available than in the personal market
How can we help at Watson Knipe?
Setting up and managing an SPV is more complex than filing a personal tax return, but with the right advice and support, it can be an excellent strategic move. We offer:
- Advice on whether an SPV is right for you based on your current and future investment plans
- Complete company formation services, including correct SIC code registration
- Help with annual accounts, Corporation Tax returns and Companies House filings
- Dividend planning and inheritance tax mitigation strategies
- Financial support to access buy-to-let mortgages and funding for new property purchases
Whether you are just starting or managing a growing portfolio, we can help you put the proper structure in place.
If you would like to explore whether an SPV structure is the right move for you, contact us today on 01623 490 120 or email us at