Why it matters
What SPV (Special Purpose Vehicle / Limited Company Landlord) means for a landlord
Incorporation is sold as the cure for Section 24, and for a higher-rate landlord building a leveraged portfolio it often is, but moving existing properties in is where the maths breaks, because SDLT and CGT on the "sale" to your own company can wipe out years of tax saving. Company mortgages also carry higher rates and fewer lenders, and profits are taxed again when you draw them as dividends. The honest test is whether you are keeping and growing the portfolio for years (incorporation tends to win) or holding a small, low-leverage set you may sell soon (it usually does not).
Worked example
How it plays out
Tom owns four buy-to-let flats in his own name and wants to buy more. Moving the four into a new company would count as selling them to it at market value, which could mean Stamp Duty and Capital Gains Tax. He keeps the existing flats in his name and buys new properties through a company, where mortgage interest is deducted before Corporation Tax.
Common mistakes
Where landlords go wrong
- 01Moving existing properties into a company without costing Stamp Duty and Capital Gains Tax.
- 02Forgetting tax on taking money out as dividends.
- 03Assuming company mortgage rates match personal ones.
What to do
A short checklist
- Take tax advice before transferring properties.
- Compare company and personal mortgage costs.
- Model how you will take profits out, not just the company tax.
