Limited Company Buy-to-Let: Do You Need an SPV?

Limited company buy-to-let means purchasing rental property through a Special Purpose Vehicle (SPV) rather than in your own name, allowing mortgage interest to be deducted in full as a business expense before Corporation Tax, currently 19% on profits up to £50,000, rising to 25% on profits over £250,000. This structure has become increasingly popular since mortgage interest relief for personally owned rental property was restricted to the basic rate, with over 33,000 landlords incorporating in the first half of 2025 alone. Whether it’s the right move depends on your tax position, portfolio size, and whether you’re buying a new property or transferring an existing one. FairBridge Finance helps landlords across the UK access SPV mortgages and weigh up whether a limited company structure fits their circumstances.

Key Takeaways

• What an SPV is: A limited company set up specifically to hold and let residential property, distinct from a trading company.
• The core tax benefit: Companies can deduct mortgage interest in full against rental income, avoiding the restriction that limits personal landlords to basic-rate relief.
• Corporation Tax rates (2026/27): 19% on profits up to £50,000, tapering up to 25% on profits over £250,000.
• Stamp duty is higher, not lower. Companies pay the same additional-property surcharge as personal buy-to-let purchases, plus a flat 17% rate on any single property over £500,000.
• Transferring an existing property into an SPV is expensive. HMRC treats it as a market-value sale, triggering full SDLT and potentially Capital Gains Tax, so SPVs work best for new purchases rather than moving an existing portfolio.
• SPV mortgages typically need larger deposits, often 25% to 30% compared to 15% to 25% for personal buy-to-let mortgages, and rates usually carry a small premium.
• Recent tax changes are pushing more landlords toward incorporation, including an increase to dividend tax rates and a new surcharge on rental income for individual landlords that doesn’t apply to companies.

What Is an SPV and How Is It Different from a Trading Company?

A Special Purpose Vehicle (SPV) is simply a limited company set up for one specific purpose, in this context, holding and letting residential property. Lenders distinguish between SPVs and standard trading companies because a company with a narrow, property-focused purpose is easier to underwrite and assess.

When setting up an SPV for buy-to-let, the company needs to be registered with the correct SIC (Standard Industrial Classification) codes, most commonly those covering letting and operating of own or leased real estate. Getting this right at incorporation avoids delays later when applying for an SPV mortgage, since lenders check that the company’s stated purpose matches what it will actually be doing.

Why Landlords Are Choosing Limited Company Buy-to-Let

The single biggest driver behind the shift toward limited company buy-to-let is how mortgage interest is treated for tax purposes. Personally owned rental property is subject to a restriction that limits mortgage interest relief to the basic rate, which can significantly increase the effective tax bill for higher and additional-rate taxpayers. Companies aren’t subject to this restriction at all; mortgage interest is deducted in full as a normal business expense before Corporation Tax is calculated.

This difference has driven a substantial shift in how landlords’ structure new purchases. Recent industry data shows landlord incorporations climbing sharply, with over 33,000 new buy-to-let limited companies formed in the first half of 2025 alone. Recent tax changes have added further momentum: a rise in dividend tax rates and a new income surcharge affecting personal landlords, which specifically doesn’t apply to companies, have both increased the relative appeal of the limited company route for many landlords.

That said, the SPV structure isn’t automatically better for everyone. Extracting profit from a company, whether as salary, dividends, or retained earnings, involves its own tax considerations, and for landlords with a small, low-turnover portfolio, the administrative cost of running a company may outweigh the tax saving.

Stamp Duty: The Cost Most Landlords Underestimate

It’s a common misconception that buying through a limited company is somehow cheaper on stamp duty. It isn’t. Companies pay exactly the same additional-property surcharge that individual landlords pay on buy-to-let purchases, currently 5% on top of standard SDLT bands, with no first-time buyer relief and no main-residence exemption available to a company under any circumstances.

There’s an additional consideration for higher-value purchases: any single residential property bought by a company for more than £500,000 attracts a flat 17% SDLT rate on the entire purchase price, a rate that increased from 15% in late 2024. This creates a significant cost jump right at that £500,000 threshold, worth factoring in carefully when budgeting for a purchase near that value.

The cost that catches many landlords off guard, however, is transferring an existing personally owned property into an SPV. HMRC treats this as a sale at market value between connected parties, meaning the company pays full SDLT, including the surcharge, on the property’s current market value, not what you originally paid for it, and a separate Capital Gains Tax liability may also apply on the transfer. For a typical mid-value buy-to-let, this can easily run into a five-figure sum payable upfront. This is precisely why SPVs tend to make the most financial sense for new purchases going forward, rather than as a way to restructure an existing portfolio.

How SPV Mortgages Differ from Personal Buy-to-Let Mortgages

Lender’s view SPV buy-to-let applications slightly differently from personal-name applications, which shows up in both the deposit required and the rate offered:

• Deposits for SPV mortgages typically start around 25% to 30% of the property value, somewhat higher than the 15% to 25% range often available for personal buy-to-let mortgages.
• Rates usually carry a modest premium compared to equivalent personal-name products, reflecting the slightly narrower pool of lenders active in the SPV space and the additional underwriting involved.
• Company accounts and structure are assessed alongside the property itself, lenders will typically want to see the company’s SIC codes, its directors’ personal guarantees, and confirmation that the company exists solely for property letting.
• Not every lender offers SPV mortgages, so the available panel is narrower than for standard buy-to-let, making broker access to specialist lenders particularly valuable in this space.

Is a Limited Company Buy-to-Let Right for You?

There’s no universal answer here, it genuinely depends on your individual circumstances. Higher-rate taxpayers building a growing portfolio of new purchases are often the group who benefit most clearly from an SPV structure, given the full mortgage interest deductibility. Landlords with a single, modest property, or those who plan to sell relatively soon, may find the running costs and complexity of a company structure outweigh the tax advantage.

This is exactly the kind of decision worth making alongside both a mortgage broker and an accountant together, since the mortgage structure and the tax position are genuinely intertwined. FairBridge Finance works with landlords across the UK to access SPV mortgages through a whole-of-market lending panel, helping structure new limited company purchases with the right lender for the portfolio size, deposit available, and long-term plans involved.

Frequently Asked Questions

What is the Corporation Tax rate for a buy-to-let SPV?

For the 2026/27 tax year, a buy-to-let SPV generally pays 19% Corporation Tax on profits up to £50,000, with the rate gradually increasing to 25% on profits above £250,000. Profits between these thresholds may qualify for Marginal Relief, resulting in an effective rate between 19% and 25%.

Is it cheaper to buy a buy-to-let through a limited company?

Not necessarily. A limited company does not automatically reduce the upfront purchase cost, as companies generally pay the same additional-property Stamp Duty surcharge as individual buy-to-let buyers. Potential tax advantages usually come from the treatment of mortgage interest and retained rental profits rather than lower purchase taxes.

Can I transfer my existing buy-to-let into a limited company?

Yes, but transferring an existing buy-to-let property into a limited company is generally treated as a market-value sale between connected parties. The company may need to pay Stamp Duty Land Tax on the property’s current value, while the individual owner may also face Capital Gains Tax, making the transfer potentially expensive.

What deposit do I need for an SPV mortgage?

Most lenders require a 25% to 30% deposit for an SPV buy-to-let mortgage. The exact deposit depends on the lender, property type, expected rental income, company structure, and the directors’ experience as landlords.

What SIC code should I use for a buy-to-let SPV?

Most buy-to-let SPVs use a SIC code related to the letting and operating of own or leased real estate. Common examples include 68209, Other letting and operating of own or leased real estate. Choosing the correct SIC code during incorporation can help avoid delays when applying for an SPV mortgage.

Is FairBridge Finance FCA authorised?

Yes. FairBridge Finance Ltd (FRN: 1051868) is an appointed representative of White Rose Finance Group Limited (FRN: 630772), which is authorised and regulated by the Financial Conduct Authority (FCA).