Limited company buy-to-let: how SPVs work

Holding buy-to-let property in a limited company changes how rental profit is taxed, how money reaches you and how the property is financed. For some investors it lowers the tax on profits they plan to reinvest. For others the extra costs and the tax on taking money out outweigh the saving. This guide explains the mechanics at a high level, with the rates for the 2026/27 tax year, so that the conversation with your accountant starts in the right place.

What an SPV is

A special purpose vehicle (SPV) is a private limited company set up only to buy, hold and let property. Keeping the company to that single activity keeps its accounts and its borrowing simple. When you incorporate, Companies House asks for a Standard Industrial Classification (SIC) code describing what the company does. The codes most relevant to property are:

Lenders set their own criteria for company borrowers, which can include the company's activities and its shareholders and directors, so confirm what a lender needs before you register the company.

Section 24 and corporation tax

The restriction on mortgage interest relief for individuals, often called Section 24, is central to the comparison. Since 6 April 2020, individuals, including partners in partnerships, who let residential property cannot deduct mortgage interest and other finance costs from their rental profit. Instead they receive a tax reduction worth 20% of the lowest of their finance costs, their property profits and their adjusted total income above the personal allowance. For a higher or additional rate taxpayer, that relief is worth less than the tax charged on the same slice of profit.

The restriction is aimed at individuals. A company calculates its profit after finance costs and pays corporation tax on the result:

• the small profits rate of 19% where profits are £50,000 or less;
• the main rate of 25% where profits are more than £250,000; and
• marginal relief between the two.

The £50,000 and £250,000 limits are reduced where there are associated companies and for short accounting periods, so a group of SPVs does not get a full small profits band for each one.

Changes from April 2027

Finance Act 2026 introduces separate income tax rates for property income from the 2027/28 tax year: a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%. They apply in England, Wales and Northern Ireland, and the Act also provides for Scottish and Welsh property rates set by the Scottish Parliament and the Senedd. Any comparison made today should be rerun on those rates for later years.

A simple comparison

As an illustration only, take a property with £10,000 of rent left after running costs and £6,000 of mortgage interest. The owner is a higher rate taxpayer in England whose other income already uses the personal allowance and basic rate band. The company has no associated companies, and the £500 dividend allowance is ignored. Rates are for 2026/27.

The illustration leaves out costs that can change the answer: company accounting and filing, any difference in mortgage pricing for companies, stamp duty, and tax when the property is eventually sold. For a basic rate taxpayer, the 20% reduction matches their tax rate, so on the same figures the personal route leaves £3,200 and most of the company advantage disappears. Test your own figures in the limited company calculator and the landlord tax calculator.

Getting money out: dividends

Profit inside a company belongs to the company. A common way to take it out is as dividends, paid from profits after corporation tax. For 2026/27, individuals have a £500 dividend allowance, and dividends above it are taxed at:

The basic and higher dividend rates rose by 2 percentage points from 6 April 2026. The tax on taking money out is why the comparison depends so heavily on whether profit will be reinvested in more property or drawn as income.

Buying in a company: the other taxes

• Stamp duty. Companies pay the higher rates on residential purchases from the first pound, 5 percentage points above the standard rates. Certain corporate bodies can pay 17% on residential property costing more than £500,000, although relief is available for a property rental business. See our stamp duty guide for worked examples.
• ATED. The Annual Tax on Enveloped Dwellings applies mainly to companies owning UK residential property valued at more than £500,000. For 1 April 2026 to 31 March 2027 the charge starts at £4,600 a year for properties valued over £500,000 and up to £1 million. Relief is available where the property is let to a third party on a commercial basis and not occupied or available to anyone connected with the owner, and claiming it needs a Relief Declaration Return.
• Gains. A company pays corporation tax on its chargeable gains, rather than capital gains tax at the 18% and 24% rates that apply to individuals.
• New build protections. The New Homes Quality Code does not cover a home bought by a commercial entity such as a company. If you plan to buy off-plan through an SPV, ask your solicitor what protections apply instead.

Moving property you already own into a company

Transferring a property from your own name into your company is a sale, even when you own the company. That has two immediate tax consequences:

• Stamp duty on market value. Where the buyer is a company connected with the seller, the chargeable consideration is taken to be not less than the market value of the property. The company pays SDLT on that value, normally at the higher rates.
• Capital gains tax on market value. A transfer between connected persons is treated as not being a bargain at arm's length, so your disposal is measured at market value. Any gain since you bought the property is taxed at 18% or 24% for 2026/27, after the £3,000 annual exempt amount, and a UK residential property gain must be reported and paid within 60 days of completion.

Incorporation relief can defer the gain where a person transfers a business to a company as a going concern, with all its assets other than cash, wholly or partly in exchange for shares. Whether a letting portfolio counts as a business for this purpose depends on the facts, and Finance Act 2026 now requires the relief to be claimed by the first anniversary of the 31 January after the tax year of the transfer. The finance needs attention too: a mortgage in your own name is a loan to you, so the company will normally need its own borrowing. Estimate the gain first in the capital gains tax calculator.

Mortgages for companies

The Prudential Regulation Authority's underwriting standards for buy-to-let apply whether the borrower is an individual or a company, so a company faces the same rental cover and stress testing. Lenders also look at the directors and shareholders behind the company and may ask for personal guarantees. Our buy-to-let mortgages guide explains interest cover and stress rates, and an FCA-authorised mortgage broker can advise on lending.

Factors to discuss with an accountant

• Your income tax band now and in the years you expect to own the property.
• Whether you plan to reinvest profit or draw it as income.
• How much of the purchase will be financed, since the interest restriction matters more as borrowing rises.
• Whether you are buying new property or considering moving existing property, which triggers SDLT and CGT.
• The running costs and administration of a company, and your long-term plans for the portfolio.

PROXERA Wealth works with buyers in personal names and through companies, and can introduce a tax specialist before you decide. Whichever structure you choose, PROXERA keeps each property's income, costs and documents in one place, which makes year-end accounts easier to prepare. Read our guide to investing in UK property for the full buying process, or talk to us.