Limited company buy-to-let (SPV)
Buying rental property through a limited company — usually a Special Purpose Vehicle (SPV) set up just to hold property — has become common since tax rules changed for individual landlords. It's not automatically better, though: it trades one set of costs and rules for another.
- Plain English, about 6 minutes
- General information, not advice
- No invented rates
What an SPV is
A Special Purpose Vehicle is simply a limited company set up for a narrow purpose — in this context, to hold one or more rental properties, rather than trade generally. Most BTL-focused lenders prefer or require a "clean" SPV with a property-related SIC code, rather than an existing trading company with other activities.
Why landlords consider a company
The main driver is tax. Since Section 24 of the Finance (No. 2) Act 2015 was fully phased in (by the 2020/21 tax year), individual landlords can no longer deduct mortgage interest and other finance costs from rental income before calculating taxable profit — instead, they get a flat-rate tax credit (currently set at the basic rate) on those finance costs. For landlords who pay tax at the higher or additional rate, this can significantly increase their effective tax bill compared with the old rules.
Properties held inside a limited company are not affected by Section 24 in the same way: the company pays Corporation Tax on its profits and can generally still deduct mortgage interest as a normal business expense before arriving at that profit figure.
This is general information, not tax advice
Tax rules, rates and thresholds (Corporation Tax, dividend tax, Capital Gains Tax, Stamp Duty surcharges, and the finance-cost tax credit rate) change and depend on your full circumstances. Get advice from a qualified accountant or tax adviser before deciding how to structure a purchase — this page explains the shape of the decision, not the current numbers.
The trade-offs
- Getting money out. Profits inside a company belong to the company, not you personally — extracting them (as salary, dividends, or otherwise) usually triggers further personal tax, which can offset some of the Corporation Tax advantage.
- Mortgage rates and fees. Limited company BTL mortgages have historically often carried somewhat higher rates or fees than personal-name equivalents, though the market has grown and more lenders now compete here — compare rather than assume.
- Lender choice. Fewer lenders offer limited company BTL than personal BTL, though the range has expanded significantly in recent years.
- Admin and cost. Running a company means annual accounts, Companies House filings, and typically an accountant's fee — an ongoing cost personal ownership doesn't have.
- Moving existing property in. Transferring a property you already own personally into a company is normally treated as a sale for tax purposes (potentially triggering Capital Gains Tax and Stamp Duty), even though no money may actually change hands with a third party. This is a common trap — take advice before assuming you can simply "move" a property into a company.
How lending differs
Limited company BTL lenders will look at the company's structure (ideally a clean SPV), and typically require personal guarantees from the company directors/shareholders — so you don't fully separate personal liability just by using a company. Rental-cover calculations work broadly the same way as personal BTL lending, though the exact stress rate or cover ratio assumed can differ by lender and by the tax status of the guarantors.
FAQ
Is a limited company always better for higher-rate taxpayers?
Often more tax-efficient on an ongoing basis, but not automatically "better" once you account for extraction tax, running costs, and how long you plan to hold the property. It genuinely depends on your numbers — this is a question for an accountant, not a rule of thumb.
Can I use one SPV for multiple properties?
Generally yes, many landlords do this, though some lenders cap how many properties they'll lend against within one SPV, or have their own portfolio requirements — check with a broker who covers limited company lending.
Next step
Speak to a qualified accountant about your personal tax position before you decide, then compare independent brokers who cover limited company buy-to-let lending.