Limited Company Buy-to-Let UK 2026: SPV Setup and Mortgage Guide
Limited company (SPV) buy-to-let is now the default structure for higher-rate-taxpayer UK landlords and serious portfolio builders. Here's why, how to set it up, which lenders to use, and the trade-offs personal-name landlords need to consider.
This guide is information only and not regulated tax, legal, or mortgage advice. The personal-vs-SPV decision interacts with your full tax position - take advice from a specialist BTL accountant before incorporating. Your property may be repossessed if you do not keep up repayments.
Why SPV became the default
Before 2017, UK BTL landlords could fully deduct mortgage interest against rental income for tax purposes. Section 24, phased in between April 2017 and April 2020, replaced that deduction with a 20% tax credit on mortgage interest - regardless of your income tax band.
Practical impact for higher-rate taxpayer landlords:
- Pre-Section-24: £20,000 rental income - £12,000 mortgage interest = £8,000 net taxable at 40% = £3,200 tax. Profit after tax: £4,800.
- Post-Section-24 (personal name): £20,000 rental income taxed at 40% = £8,000, minus £2,400 (20% credit on £12,000 interest) = £5,600 tax. Profit after tax: £2,400.
- Limited company (SPV): £20,000 rental - £12,000 interest = £8,000 corporation-tax-able at 19% = £1,520 tax. Profit retained in company: £6,480 (extractable later).
On the same property, the SPV saves £4,080/year in tax for a higher-rate taxpayer. Over a 10-year hold, that compounds to roughly £40,000 in retained capital - significant for portfolio builders.
When personal-name still wins
- Basic-rate taxpayers (income comfortably under £50,270 including rental). The 20% mortgage-interest credit covers the tax due, so Section 24's impact is neutral. Personal-name is simpler and cheaper to operate.
- Single small property where the income won't push you into higher-rate territory.
- Properties you plan to live in later as your main residence (CGT main-residence relief on personal-name; SPV can't access this).
SPV setup: practical steps
- Choose company name. Companies House restrictions apply (no offensive, similar to existing names, certain sensitive words).
- Register at Companies House. £50 online, processed within 24 hours typically. You'll need: name, registered office address, director details, shareholder structure, SIC code (68209 for property letting), share allocation.
- Set up company bank account. Most UK business banks (Starling, Tide, NatWest, Lloyds) offer SPV-friendly accounts. Some BTL lenders require the account to be UK-based with the same lender or partner.
- Appoint accountant. Specialist BTL accountants understand the interaction of personal income, corporation tax, dividend extraction, and exit strategy. Generic accountants often miss optimisation opportunities.
- VAT registration. Generally not required for SPVs (residential rental is exempt). Different for short-term lets / serviced accommodation.
- Set up confirmation statement reminder. Annual filing required.
- Apply for SPV BTL mortgage. Via a broker who places SPV cases.
SPV BTL mortgage lender list 2026
| Lender | Notable |
|---|---|
| Paragon | Long-established SPV specialist; up to 75% LTV; broad criteria |
| Foundation Home Loans | Active in SPV BTL across personal and director-led cases |
| Aldermore | Established SPV BTL route; broker-led |
| Kent Reliance | Flexible on new SPV with no trading history |
| Together | More flexible on adverse director credit and unusual property types |
| Precise Mortgages | Specialist SPV BTL placement |
| Landbay | SPV and HMO SPV cases |
| Fleet Mortgages | Pure BTL lender; SPV-friendly |
| BM Solutions (Lloyds Group) | SPV BTL on some products |
Personal guarantees explained
Almost every UK SPV BTL lender requires a personal guarantee from the directors. The PG makes the directors personally liable for the company's debt if the company defaults. Without this, lenders would be left chasing a shell company with no assets beyond the mortgaged property.
Practical implications:
- The "limited liability" protection of a company structure is largely neutralised for the mortgage debt specifically.
- Directors should disclose PG-related liabilities on their own residential mortgage applications.
- Multiple directors typically sign joint and several PGs - each is liable for the full debt.
Extracting money from the SPV
The main routes:
- Director's salary - typically capped at the National Insurance secondary threshold (~£9,100) to avoid NI charges. Corporation-tax-deductible to the company.
- Dividends - taxed at lower personal rates than salary (8.75% basic, 33.75% higher, 39.35% additional in 2026). Tax-free dividend allowance £500.
- Pension contributions - corporation-tax-deductible by the company, no NI; the most tax-efficient extraction route for retained-profit directors.
- Director's loan - flexible short-term but careful: loans outstanding 9 months after year-end face 33.75% S455 corporation tax charge (refundable when repaid).
- Buying out shareholders or members - relevant for family-structured SPVs.
What to do next
If you're a higher-rate taxpayer planning a portfolio, the SPV route usually pays for itself within 2-3 years. Match with a BTL broker who handles SPV placement regularly. They'll work alongside your accountant to structure the mortgage to fit your tax strategy.
FAQs
What's an SPV for buy-to-let?
A Special Purpose Vehicle (SPV) is a limited company set up solely to hold property investments. UK BTL lenders typically use SIC code 68209 (other letting and operating of own or leased real estate) as the activity classification. SPVs are simpler for lenders to underwrite than trading companies because the company's only purpose is rental property.
Should I move existing personal BTL properties into a limited company?
Usually no - it's a sale and rebuy, triggering SDLT (3% surcharge on every property), capital gains tax on personal disposal, and conveyancing costs. New purchases inside the SPV from day one work much better. The exception: Incorporation Relief (Section 162 TCGA 1992) may allow tax-deferred transfer of a portfolio that constitutes a business - take specialist tax advice before assuming this applies.
Which UK lenders offer limited company BTL mortgages in 2026?
Paragon, Foundation Home Loans, Aldermore, Kent Reliance, Together, BM Solutions (some), Precise, Landbay, Vida, Fleet Mortgages, and several specialist lenders. The mainstream high-street banks generally don't offer limited-company BTL - it's a specialist market. A broker is essential.
What's the personal guarantee?
Most UK limited-company BTL lenders require a personal guarantee from the directors. This means if the company defaults on the mortgage, the directors are personally liable. The PG protects the lender against the company being a shell with no assets beyond the mortgaged property.
How does corporation tax compare with personal income tax on rental?
Corporation tax in 2026 is 19% on profits up to £50,000 and 25% on profits above £250,000 (with marginal relief between). Personal higher-rate income tax is 40-45%. For landlords whose property income pushes them into higher-rate territory, SPV typically wins materially. For basic-rate taxpayers with small portfolios, personal name may still be cleaner.
Can I extract money from the SPV tax-efficiently?
Yes, but with planning. Options: director's salary (up to NI threshold), dividends (taxed at lower rates than salary), pension contributions (corporation-tax-deductible), director's loan (must be carefully managed for tax-charge avoidance). A specialist BTL accountant can model the best extraction strategy for your wider tax position.