Short answer: if you’ve got a mortgage and you pay higher or additional-rate tax, an SPV company usually leaves you with more cash after tax. If you’re basic-rate, low-geared, or plan to spend all the rent personally, own name can still win.
Below we show the numbers, the rules that drive them, and a copy-paste calculator you can tailor to your rent, costs, rate and tax band no fluff, just the numbers.
Related reading:
• How to Pay Yourself as a Limited Company Director (UK 2025/26)
• Limited Company Setup Checklist 2025/26
• Setting Up a Ltd Company for Properties: Holding Company, Group Structure & SPV Explained
• DIY Bookkeeping Checklist (UK 2025/26)
• Rolling Cashflow Forecasts: How to Stay Ahead of Surprises
Why do so many landlords use SPVs?
Inside a company you can deduct mortgage interest in full (small SPVs rarely hit CIR limits). In your own name, interest relief is capped at a 20% tax credit (Section 24). That difference is decisive for many mortgaged, higher-rate landlords. See our plain-English explainer of dividend extraction in How to Pay Yourself as a Director.
What tax actually applies?
- Own name: Income Tax on rental profit (with a 20% finance-cost credit), then CGT at 18%/24% on sale (residential).
- SPV: Corporation Tax first (small profits vs main rate). If you extract cash, you then pay dividend tax. We cover salary vs dividend mechanics in the Director Pay guide above.
Any extra taxes for companies?
Yes. Companies always pay the higher-rates SDLT on residential purchases. Also watch ATED for dwellings over £500k (often relieved for normal lettings, but a Relief Declaration Return is still required). If you’re financing a purchase, grab our checklist: Lender Readiness Checklist (2025/26 Edition).
Worked Example (2025/26): “Just give me the numbers”
Assumptions (we’ll happily re-run with your exact figures):
- Rent: £24,000/yr Other costs (ex-interest): £2,400
- Mortgage balance: £200,000 at 5.25% (interest-only → £10,500 interest)
- Personal band: Higher-rate 40% Dividend band: Higher-rate 33.75%
- Dividend allowance: £500 Corporation Tax: 19% (small profits)
| Route | Cash profit before tax | Tax elements | Total tax | Cash to you |
|---|---|---|---|---|
| Own name (you also have other income) | £11,100 | Income Tax on £21,600 (40%) less Section 24 credit (20% × £10,500) | £6,540 | £4,560 |
| SPV – retain | £11,100 | Corporation Tax 19% | £2,109 | £8,991 (retained) |
| SPV – extract all | £11,100 | CT £2,109 + dividend tax on £8,491 (after £500 allowance @ 33.75%) | £4,975 | £6,125 |
Effective tax on the same £11,100 cash profit
- Own name: 58.9%
- SPV (retain): 19.0%
- SPV (extract all): 44.8%
Why the gap? In your own name, interest isn’t deductible you get only a 20% credit. In a company, interest is deductible, so you’re taxed on a smaller profit first, and only pay dividend tax if/when you take cash out. For extraction options and NIC nuances, see How to Pay Yourself as a Director.
Want your own comparison?
Send: “Rent £…, costs £…, mortgage £…, rate …%, personal band, dividend band.”
We’ll also stress-test your interest rate and voids. See: Rolling Cashflow Forecasts and the toolkit: 52-Week Cashflow Forecast Clarity Kit (2025/26 Edition).
When an SPV Typically Wins
- You’re higher/additional-rate and mortgaged.
- You plan to retain profits to reinvest or deleverage, not draw everything each year.
- You want flexibility in profit extraction (dividends, salary, director’s loan repayments) see our Director Pay guide.
- You want cleaner underwriting and structure, set up using our Limited Company Setup Checklist and, for property groups, see SPV & Holding Company structures.
When Own Name Often Wins
- You’re basic-rate and/or low-geared (little or no mortgage).
- You need all the rent personally each year (so SPV dividend taxes would bite anyway).
- You prefer simplicity and lower ongoing compliance use our DIY Bookkeeping Checklist to stay tidy.
- You’re likely to sell soon and want individual CGT treatment on sale.
The Rules Driving the Decision (so you can trust the numbers)
- Section 24 (individuals): finance costs are no longer deductible; you receive a basic-rate (20%) reducer.
- Companies: interest is generally deductible under loan relationships (CIR rarely hits small SPVs).
- Corporation Tax: small profits vs main rate with marginal relief in between.
- Dividends: £500 allowance then 8.75% / 33.75% / 39.35% by band (see extraction examples in our Director Pay guide).
- SDLT for companies: always higher rates on residential; plan this in your term sheet—use the Lender Readiness Checklist.
- Transferring later to a company: SDLT market value on connected transfers; CGT can arise personally unless s.162 incorporation relief applies (requires a property business). Our structures explainer here: SPV & Holding Company structures.
- Admin reality: Companies House accounts + CT600 + (if applicable) ATED. Individuals: Self Assessment and (from 2026/27) MTD for ITSA quarterly updates; see the bookkeeping guide above.
Decision Checklist (copy-paste)
- Tax band & leverage: Higher/additional-rate + mortgages? Lean SPV. Low/no debt + drawing cash? Lean own name.
- Extraction plan: Reinvest/retain (SPV shines) vs draw all (run the dividend maths first).
- Buying via SPV? Use our Limited Company Setup Checklist and lender-friendly SIC codes (see the structures explainer).
- Transferring existing properties? Cost SDLT @ market value + CGT and test s.162 eligibility—start with our SPV & Holding Company structures.
- Finance proof-ready? Download the Lender Readiness Checklist.
- Cashflow resilience: Build headroom with a forward view—read Rolling Cashflow Forecasts and grab the 52-Week Cashflow Forecast Clarity Kit.
- Bookkeeping cadence: Keep records squeaky clean—use the DIY Bookkeeping Checklist.
FAQs (They Ask, You Answer)
Is there a simple rule of thumb?
If you’re higher-rate and mortgaged, SPV is usually more cash-efficient—especially if you don’t need to draw every pound annually. For extraction choices and NIC, see How to Pay Yourself as a Director.
Can I move properties I already own into an SPV without tax?
Not usually. Connected transfers are charged to SDLT at market value, and you may face CGT personally unless s.162 incorporation relief applies (only for a genuine property business). Start with our guide to SPV & Holding Company structures.
Do companies always pay more SDLT?
For residential, yes—companies always pay the higher-rates SDLT. Factor this into your funding plan using the Lender Readiness Checklist.
What if my interest costs are tiny?
Section 24 bites less when gearing is low, so own name can be competitive (or better) if you’re basic-rate and have little/no debt. Use our DIY Bookkeeping Checklist to keep compliance simple.
How do I forecast the impact of interest rate changes?
Use a rolling cashflow view and test rate shocks—see Rolling Cashflow Forecasts and the 52-Week Cashflow Forecast Clarity Kit.