London’s property market remains one of the most valuable — and most taxed — in the world. Since the withdrawal of higher-rate mortgage interest relief for individual landlords (Section 24, phased in from 2017 and fully in effect since 2020), thousands of London investors have turned to SPV property London structures — Special Purpose Vehicles — as the vehicle of choice for holding buy-to-let and HMO property.
But here’s the problem: SPVs are widely misunderstood. Whether you’re exploring SPV vs personal ownership, worried about SDLT on an SPV transfer, or unsure how SPV corporation tax applies to your property company structure in the UK, the pitfalls are real. At GM Professional Accountants, your dedicated SPV landlord accountant in London, we regularly encounter landlords who have set up an SPV incorrectly, attempted a buy-to-let SPV transfer without specialist advice, or misunderstood the special purpose vehicle property tax implications — exposing themselves to significant HMRC penalties and unexpected bills.
Understanding common SPV mortgage mistakes UK landlords make — and how to avoid them — is exactly what this guide is for. We cover every major SPV portfolio mistake we see in practice, how to fix each one, and what a correctly structured property company structure UK actually looks like. We also explain how to complete your SPV Companies House filing obligations without missing a deadline.
What is an SPV and why do London landlords use one?
A Special Purpose Vehicle is a limited company incorporated specifically to hold property assets — typically registered at Companies House with SIC code 68100 (buying and selling own real estate) or 68209 (other letting and operating of own or leased real estate). Unlike a trading company, an SPV has a single defined purpose: to acquire, hold, and let property.
The primary attraction is tax efficiency. Within an SPV, mortgage interest remains fully deductible against rental income — a relief denied to individual landlords since 2020. Profits are subject to corporation tax (currently 19–25% depending on profit level) rather than income tax at up to 45%. Retained profits can be reinvested without triggering personal income tax. And dividends can be extracted in a tax-efficient manner alongside a salary.
According to GOV.UK property transaction statistics, limited company buy-to-let purchases have grown significantly year-on-year, now accounting for the majority of new buy-to-let acquisitions in London.
The 8 most common SPV portfolio mistakes
Using the wrong SIC code at incorporation
The SIC code assigned at Companies House determines how HMRC and mortgage lenders categorise your SPV. Many London landlords — or accountants unfamiliar with property structures — incorporate with a generic “holding company” or trading SIC code, which can cause SPV mortgage products to be declined and create complications with HMRC’s treatment of the company’s activities.
Transferring existing personally-held property into an SPV without advice
This is perhaps the costliest mistake we encounter. When you transfer a property from personal ownership to a limited company — even one you control — HMRC treats it as a market-value disposal. This triggers Capital Gains Tax (CGT) on any gain accrued, and Stamp Duty Land Tax (SDLT) on the full market value at the point of transfer, including the 3% additional dwelling surcharge.
On a London property worth £700,000 with an original purchase price of £400,000, this could mean a CGT bill of £56,000 (at 24% for residential property post-October 2024 Budget) and an SDLT bill of £42,000 — a combined liability of nearly £100,000 before any benefit has been received.
Failing to maintain the SPV as a separate legal entity
An SPV’s legal protection and tax efficiency depends on maintaining clear separation between the company and its directors/shareholders. We regularly encounter London landlords who mix company funds with personal funds, pay personal expenses from the SPV’s bank account, or fail to issue proper dividend vouchers when extracting profits.
This behaviour risks “piercing the corporate veil” — a legal doctrine that can expose directors to personal liability — and creates serious tax compliance problems including deemed salary charges and Director’s Loan Account (DLA) issues under s.455 CTA 2010, which imposes a 33.75% charge on outstanding DLA balances.
Ignoring the mortgage availability problem
SPV mortgages are a specialist product. Not all lenders offer them, rates are typically higher than personal buy-to-let mortgages, and many lenders have strict requirements around the SPV’s corporate structure, shareholding, and SIC code. London landlords sometimes incorporate an SPV and then discover they cannot obtain financing on acceptable terms — defeating the purpose of the structure.
Getting the shareholding structure wrong
Many London landlords set up an SPV with a single class of ordinary shares and then later realise they cannot distribute profits tax-efficiently between spouses or adult children, or that the structure doesn’t work for estate planning purposes. Equally, over-complicated structures can trigger anti-avoidance provisions or create conflicts with lenders who require directors to be majority shareholders.
Overlooking corporation tax compliance and filing deadlines
Unlike self-assessment for individuals (31 January filing deadline), corporation tax returns for SPVs must be filed within 12 months of the accounting period end, and corporation tax itself must be paid within 9 months and 1 day. Miss these deadlines and Companies House will issue a penalty notice; HMRC will charge late filing penalties and interest.
Neglecting VAT registration where commercial property is involved
Residential property is exempt from VAT. But London landlords who hold mixed-use properties, commercial units, or who have opted to tax (OTT) a property are often unaware of the complex VAT implications. Incorrectly recovering input VAT, or failing to apply the option to tax correctly, can lead to significant HMRC assessments.
Not planning for exit from the outset
Many London investors set up an SPV with no clear exit strategy. When the time comes to sell a property, they discover that selling through a company is less tax-efficient than they assumed: gains are subject to corporation tax within the SPV, and then the remaining proceeds are subject to income tax or CGT again when extracted by shareholders.
SPV vs personal ownership: comparison
| Factor | Personal ownership | SPV (limited company) |
|---|---|---|
| Mortgage interest deduction | Restricted (20% basic rate credit only) | Fully deductible against income |
| Tax rate on rental profit | Income tax: 20–45% | Corporation tax: 19–25% |
| SDLT on additional properties | 3% surcharge applies | 3% surcharge applies |
| CGT on disposal | 18–24% residential (post Oct 2024) | Corporation tax + dividend/CGT on extraction |
| Mortgage availability | Wider product range | Specialist lenders only; higher rates |
| Income-splitting with spouse | Limited (deed of trust / Form 17) | Flexible via share structure |
| Profit retention & reinvestment | All profit taxed immediately | Retain post-CT profits within company |
| Administration burden | Self assessment only | Annual accounts, CT return, Companies House |
| Best suited for | Smaller portfolio, capital growth focus | Larger portfolio, high leverage, rental income focus |
Step-by-step: setting up an SPV correctly
If you’ve decided an SPV is right for your situation, here is the correct sequence of steps:
- Instruct an ACCA-qualified accountant with SPV experience before you do anything else.
- Engage a specialist SPV mortgage broker to confirm lending is available for your target properties on acceptable terms.
- Design the shareholding structure (classes of shares, spouse inclusion, estate planning considerations) with both your accountant and a solicitor.
- Incorporate at Companies House with the correct SIC code (68100 or 68209) and correct articles of association.
- Open a dedicated business bank account in the SPV’s name before any transactions occur.
- Register for HMRC Corporation Tax within three months of starting to trade.
- Set up cloud accounting software and agree a bookkeeping process with your accountant.
- Purchase property in the SPV’s name — never in personal name with a view to transferring later.
- Maintain proper records: lease agreements, rent receipts, contractor invoices, board minutes for dividend declarations.
- Review the structure annually with your accountant as tax rules change.
Real client case study
A London-based landlord approached us with a portfolio of four buy-to-let properties, all held personally. Following the full implementation of Section 24, their effective tax rate on rental income had risen from 28% to 47% — they were paying tax on money they hadn’t received. A previous accountant had suggested simply transferring all four properties into a new SPV.
When we ran the full numbers, the transfer cost — CGT on accrued gains across four London properties, plus SDLT at market value with the 3% surcharge — would have exceeded £180,000. This made an immediate transfer economically irrational.
SPV pre-launch checklist
- Specialist accountant instructed before incorporation
- SPV mortgage broker consulted — lending confirmed as available
- Shareholding structure agreed (share classes, spousal inclusion)
- Solicitor reviewed articles of association
- Incorporated with correct SIC code (68100 / 68209)
- Dedicated business bank account opened
- HMRC corporation tax registration completed within 3 months of trading
- Cloud accounting software set up (Xero / QuickBooks)
- Director loan policy agreed — no personal expenses through company
- Annual accounts and CT filing deadlines noted
- Exit strategy modelled — hold period and disposal tax cost estimated
- VAT position assessed if any commercial elements
Frequently asked questions
Is it always better to use an SPV for buy-to-let in London?
Not always. An SPV is most advantageous for higher-rate taxpayers with large, leveraged portfolios where rental income is the primary return. For smaller portfolios, shorter holds, or those where capital growth dominates, personal ownership or alternative structures may be more efficient. Always model both scenarios with a specialist accountant before deciding.
Can I transfer my existing London properties into an SPV?
Yes, but it is almost always tax-expensive. A market-value transfer triggers CGT on accrued gains and SDLT at full market value including the 3% surcharge. Incorporation relief under s.162 TCGA 1992 may reduce CGT where the activity qualifies as a business, but the SDLT charge still applies. Specialist advice is essential before any transfer.
What is the corporation tax rate for an SPV in 2025/26?
For companies with profits up to £50,000, the small profits rate of 19% applies. For profits above £250,000, the main rate of 25% applies. Between £50,000 and £250,000, marginal relief applies. These thresholds are divided by the number of associated companies, so multiple SPVs reduce each company’s threshold accordingly.
Do SPV mortgages have higher interest rates than personal buy-to-let mortgages?
Generally, yes. SPV mortgage products are offered by a smaller pool of specialist lenders and typically carry a rate premium of 0.3–0.8% over equivalent personal products. However, the tax saving on mortgage interest deductibility within the SPV often more than offsets this premium for higher-rate taxpayers with significant leverage.
Do I need to file accounts for an SPV even if it hasn’t started trading?
Yes. Once incorporated, a company must file a confirmation statement with Companies House annually regardless of activity. If the company has commenced to trade (which includes holding property), corporation tax returns and annual accounts must also be filed. Failure to file carries automatic penalties from both Companies House and HMRC.
Can family members be shareholders in an SPV without living in the property?
Yes — adult family members (including spouses and adult children) can be shareholders in an SPV and receive dividends from it. HMRC’s settlement legislation (s.625 ITTOIA 2005) applies where the arrangement has the characteristics of a settlement rather than a genuine investment, so the structure must be commercially sound and properly documented.
Useful resources from UK authorities
Key takeaways
- SPVs offer real tax advantages for London landlords — but only when set up and managed correctly.
- The single most common and costly mistake is transferring existing personally-held property into an SPV without modelling the full tax cost first.
- Correct SIC code, shareholding structure, and mortgage strategy must be agreed before incorporation, not after.
- SPVs come with significant ongoing compliance obligations — corporation tax, annual accounts, and Companies House filings are all mandatory.
- Exit strategy matters as much as entry strategy: double-layer taxation makes SPVs sub-optimal for short-term capital growth plays.
- Always work with an ACCA-qualified accountant who specialises in London property structures.
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Disclaimer: This content is for general guidance only and does not constitute financial or tax advice. Tax rules change and how they apply depends on your individual circumstances. Please speak to a qualified accountant before acting on anything here.
