If you’re a landlord or planning to invest in UK property this year, you’re probably already aware of how much the tax landscape has shifted. From restrictions on mortgage interest relief to rising personal tax rates, owning property in your own name isn’t always as tax-friendly as it once was. That’s why more and more landlords are turning to SPVs – Special Purpose Vehicles – as a smarter way to hold investment property.
So what exactly are the tax perks of using an SPV in 2025? And how do they stack up against owning property personally? Let’s break it down in plain English.
What is a Property SPV and Why Should Landlords Care?
A Property SPV is simply a limited company created for buying and renting out property. It doesn’t do anything else, which makes it cleaner in the eyes of lenders, tax advisers and accountants.
Plenty of first-time investors now opt for spv property limited company formation right from the start. It may seem like more paperwork at first, but the tax benefits can make a big difference over time.
Tax Benefits of Using an SPV in 2025
Mortgage Interest Relief Gets Put Back on the Table
One of the biggest reasons landlords are switching to SPVs is because companies can fully deduct mortgage interest as a business expense. If you own property personally, you only get a basic-rate tax credit for interest payments – and if you’re a higher-rate taxpayer, that hurts.
With an SPV, your mortgage interest gets deducted from your rental income before tax is calculated. That means your profits – and tax bill – are much lower than if you owned the property yourself.
You Can Be Strategic with Your Profits
When you own property personally, you’re taxed on all the profits – whether you spend them or not. With a company, you’ve got more flexibility.
You could:
· Leave the profits in the company to reinvest in more property
· Pay yourself a salary
· Take dividends (which can be taxed at lower rates)
· Share ownership with a spouse or family member for better tax planning
This level of control makes it easier to grow a portfolio while keeping your personal tax bill in check.
Better for Inheritance Planning
Let’s face it – property is a long game, and many landlords are thinking ahead to the next generation. SPVs make it easier to pass on wealth in a structured way.
Instead of transferring property (which comes with legal and tax hurdles), you can gift or sell company shares. You can even issue different types of shares to give family members a stake, while keeping control yourself. With proper planning, you can reduce inheritance tax and protect your estate for your loved ones.
More Efficient Capital Gains Planning
When a company sells a property, it pays corporation tax on the profit – not Capital Gains Tax (CGT) like an individual would. While this isn’t always lower, it can be easier to manage and plan for.
Plus, since the profit stays in the company, you don’t have to take it out and pay personal tax on it right away. You can reinvest it into more property, keeping your money working harder for longer.
A Few Watchouts
It’s not all sunshine and rainbows. Running a company comes with extra responsibilities:
· You’ll need to file Annual Accounts and Corporation Tax returns.
· Mortgage options for SPVs are slightly more limited and may come with higher interest rates.
· If you already own property and want to transfer it into a company, you could trigger Capital Gains Tax and Stamp Duty Land Tax.
That’s why it’s best to get advice before making the switch – especially if you already have a portfolio.
So, Is It Worth It?
For many landlords – especially higher earners or those with multiple properties – the benefits of using an SPV outweigh the admin. It’s more work upfront, but the long-term tax savings and planning flexibility can be worth it.
If you’re just starting out, it might make sense to set up spv property limited company formation before your first purchase, so you avoid the costs of transferring later on. Either way, a conversation with a property tax adviser is well worth having.
