Holding buy-to-let property in a Special Purpose Vehicle (SPV) limited company can restore full mortgage interest tax relief for higher-rate taxpayers. But it's not a free lunch - there are setup costs, higher mortgage rates, and corporation tax on rental profits and eventual extraction. We model the whole picture.
Setting up the SPV
An SPV is a limited company set up solely to hold property. Lenders require a specific SIC code (68209/68320) and a clean company structure. We can work with your accountant or refer you to one experienced in property SPVs.
- Correct SIC codes for property SPVs
- Clean shareholder structure
- Accountant referral if needed
80%+ ICR rules
Some specialist lenders apply a higher ICR of 80% or more for limited company BTL, reflecting their view of company risk. We know which lenders apply standard 125%–145% ICR to SPVs and which demand the higher ratio, so you borrow against realistic figures.
- Lenders applying standard 125%–145% ICR to SPVs
- Lenders demanding 80%+ ICR flagged upfront
- Stress-tested at each lender's notional rate
Corporation tax implications
Rental profit inside an SPV is subject to corporation tax (currently 19%–25%). Extracting profit via salary or dividends carries personal tax. Mortgage interest is fully deductible within the company, but the overall tax efficiency depends on your personal circumstances - we don't pretend it's always the right answer.
- 19%–25% corporation tax on rental profit
- Full mortgage interest deductibility inside the SPV
- Extraction cost modelled (dividends, salary)