What is an SPV Limited Company?
Landlords often use SPV companies for their property portfolios. Our guide will explain what they are and how they differ from normal private limited companies.
SPV (Special Purpose Vehicle) Company Explained
An SPV company, or Special Purpose Vehicle, is a type of limited company created to isolate financial risk and serve a specific, narrowly defined business purpose. In the UK, SPVs are most commonly used by landlords and property investors to hold and manage buy-to-let properties in a tax-efficient way.
Why Set Up an SPV Company?
From a professional accountancy standpoint, SPVs can offer clear financial and operational benefits, particularly in sectors such as property, finance, and infrastructure. Common reasons to create an SPV include:
Ring-fencing risk: An SPV operates independently from its parent or investors, isolating risk in case of financial difficulties.
Efficient taxation: For property investors, corporation tax rates (currently 25% as of 2025) on SPV profits can be more favourable than higher-rate personal income tax.
Simplified accounting: SPVs are often set up for a single property or project, simplifying the company’s balance sheet and profit/loss tracking.
Easier finance approval: Mortgage lenders often prefer lending to SPVs for buy-to-let purposes because of the clear, dedicated purpose of the business.
Common Use Cases for SPVs
| Use Case | Industry | Example |
|---|---|---|
| Buy-to-let investments | Property | A landlord purchases a residential property through an SPV to benefit from corporation tax rates and mortgage interest relief. |
| Project finance | Construction | A company creates an SPV to build and operate a toll road. The SPV raises funds and is responsible for the project. |
| Asset securitisation | Financial services | A bank transfers risky assets to an SPV to remove them from its balance sheet. |
| Joint ventures | Commercial | Two companies form an SPV to deliver a large-scale infrastructure project while sharing profits and liabilities. |
Setting Up an SPV in the UK
Creating an SPV company is similar to setting up any private limited company, but the purpose and structure should be clearly defined. Here’s how:
1. Choose a Company Name
Ensure it complies with Companies House rules and reflects the SPV's purpose if possible (e.g. “Greenfield Property SPV Ltd”).
2. Appoint Directors and Shareholders
These can be individuals or companies. Lenders often prefer experienced directors in SPVs used for property.
3. Select SIC Code(s)
For property SPVs, the most common codes include:
68100 – Buying and selling of own real estate
68209 – Other letting and operating of own or leased real estate
4. Incorporate with Companies House
Use an accountant or formation agent to ensure the correct structure is adopted from the start.
Advantages of Using an SPV
✅ Tax efficiency – Especially for higher-rate taxpayers, as profits are taxed at corporation tax rates
✅ Professional appeal – Lenders often favour SPVs for buy-to-let borrowing
✅ Simplified reporting – Clean company accounts with single-purpose clarity
✅ Asset protection – Personal liability is limited to the company’s assets
Disadvantages of Using an SPV
❌ Admin burden – Annual filings, accounts, and possible VAT registration
❌ Mortgage restrictions – Not all lenders offer SPV mortgages
❌ Higher interest rates – Compared to individual buy-to-let products
❌ Tax on extraction – Dividends or salaries paid out are still subject to personal tax
SPVs and Mortgage Lenders
Lenders assessing SPV buy-to-let applications typically prefer:
A limited company with a clear SIC code (68100 or 68209)
Personal guarantees from directors
Experience in property investment or management
While interest rates may be marginally higher, many investors find the tax benefits outweigh the additional cost.
Should I Use an SPV for Property Investment?
Whether an SPV is the right vehicle depends on your personal tax position, investment goals, and long-term strategy. An SPV is often beneficial for:
Higher-rate taxpayers
Portfolio landlords with multiple properties
Joint ventures or family investments
Those planning long-term capital growth and reinvestment of profits
Always consult a qualified accountant or tax advisor before proceeding.
SPVs and Tax: What You Need to Know
| Tax Type | SPV | Individual |
|---|---|---|
| Income Tax | Taxed via Corporation Tax at 25% (2025/26) | Higher rate tax up to 45% |
| Mortgage Interest Relief | Full relief available | Restricted to basic rate |
| Capital Gains Tax | Gains taxed at 19–25% in company | 18% or 28% CGT for individuals |
| Dividend Tax | 8.75%–39.35% when extracting profits | N/A (only applies if using SPV) |
How We Can Help
As UK-qualified spv accountants, we’ve helped hundreds of landlords and developers structure their property ventures efficiently using SPVs. Our services include:
SPV formation and registration
Mortgage lender-ready company setup
Ongoing SPV accounts and tax filing
Dividend planning and extraction advice
Group structures and inter-company transfers
Frequently Asked Questions
❓ Is an SPV the same as a limited company?
An SPV is a type of limited company, but its defining feature is that it is formed for a specific, narrow purpose – such as owning a single property or completing a particular project.
❓ Do I pay myself a salary or dividend from an SPV?
Yes, but these are separate from the company’s profits. You’ll need to pay income tax and possibly National Insurance on salaries, and dividend tax on distributions.
❓ Can I transfer properties I already own into an SPV?
Yes, but be aware of potential Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT) implications. Professional advice is essential before doing this.
❓ Can an SPV be VAT registered?
Yes, especially if it deals with commercial property or construction. Residential letting income is generally exempt, but certain renovations or developments may involve VAT.
Speak to Our Experts About SPVs
Thinking about setting up an SPV for your next property investment? Our team of expert UK accountants can guide you through the entire process — from incorporation to tax strategy and lender compliance. Contact us today to arrange a no-obligation consultation.