Buy-to-let limited company accountants for SPVs and property companies

Buy-to-let limited companies in plain English

In short: a buy-to-let limited company owns the properties instead of you personally. The company pays Corporation Tax on its rental profits, can deduct mortgage interest in full and can keep profits to reinvest. You then take money out as salary, dividends or loan repayments.

Why landlords use a limited company

• Mortgage interest: companies deduct finance costs in full. Individual landlords only get a 20% tax credit.
• Corporation Tax rates: 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between, compared with Income Tax at up to 45%.
• Reinvesting: profits left in the company to buy more property are taxed at Corporation Tax rates only.

The downsides to weigh up

• Taking money out as dividends is taxed again in your hands.
• Companies pay the higher rates of Stamp Duty Land Tax on residential purchases.
• Moving properties you already own into a company is treated as a sale at market value, which can mean Capital Gains Tax and Stamp Duty. Incorporation relief may apply if the letting is a genuine business.
• Higher accountancy costs, Companies House filings and sometimes higher mortgage rates.

Setting up an SPV

Lenders usually expect a company whose only activity is letting property, using SIC code 68100 or 68209. We can form the company for £200 including VAT, register it with HMRC and set up bookkeeping from day one. See company formation.

Already own property personally?

Read our guide to incorporation relief, or ask us to compare keeping your portfolio personally against moving it into a company. If you are a London landlord, see our property accountants in London.