Misconception 1: "Limited company is always cheaper"
It depends on your marginal tax rate and how geared the property is. A basic-rate taxpayer (20%) with a low-LTV BTL might be paying less tax in personal name than they would as a director of an SPV. The arithmetic shifts heavily in favour of limited company ownership when:
- You're a higher-rate (40%) or additional-rate (45%) taxpayer.
- Your gearing is high — large mortgage relative to rental income.
- You intend to retain rather than withdraw rental profits.
- You plan to grow the portfolio with reinvested earnings.
The point is that "limited company is better" is a sweeping statement, not a personal answer. Model both structures over a 10-year horizon with a chartered accountant before committing.
Misconception 2: "I can transfer my existing portfolio in tax-free"
Probably not. Transferring a property from personal name to an SPV is a disposal at market value — triggering capital gains tax on any uplift since purchase and stamp duty land tax (including the 5% additional dwellings surcharge) for the company as the new owner. On a typical landlord's portfolio, the combined CGT and SDLT bill on incorporation can easily exceed £100,000.
Incorporation relief under section 162 TCGA 1992 can defer the CGT (rolled into the value of the new shares), but only if HMRC accepts the portfolio is being run as a "business" rather than a passive investment. The widely-cited indicator is 20+ hours a week of personal involvement across at least 4 actively-managed properties, but the test is subjective and case-by-case. SDLT is rarely relieved unless the portfolio qualifies as a partnership beforehand.
Misconception 3: "Limited company mortgages are 2% more expensive"
This was true in 2017 when only a handful of lenders offered SPV products. In 2026 the market is mature. Lenders such as Paragon, Aldermore, Precise, Landbay, Foundation, Kent Reliance, BM Solutions, The Mortgage Works and Birmingham Midshires all actively price SPV cases. Typical 5-year fixed pricing at 75% LTV in 2026:
- Personal name: 5.39%
- SPV: 5.69–5.89%
That 0.3–0.5% gap is real, but it's narrower than most landlords assume. On a £200,000 interest-only loan, the rate premium adds roughly £600–1,000 a year — usually dwarfed by the tax saving for higher-rate-taxpayer landlords.
Misconception 4: "I'll have limited liability if it all goes wrong"
The company is liable for the mortgage on paper. In practice every SPV BTL lender requires a personal guarantee from each director, making you personally liable for any shortfall after the property is repossessed and sold. The "limited liability" of the SPV protects you from third-party claims (a tenant injury suit, a contractor dispute) but not from the mortgage itself.
Misconception 5: "A brand new SPV won't get approved"
Lenders actually prefer freshly incorporated SPVs to trading companies. A trading company has other liabilities, other income streams, and other directors that complicate underwriting. A pure SPV with the right SIC codes (typically 68100, 68201, 68209 or 68320 for property investment) is a clean balance sheet the lender can underwrite from scratch.
Most lenders want directors to also be the sole shareholders. Complex shareholding structures (family members, trust ownership, EBTs) narrow the lender panel sharply.
Misconception 6: "I can mix residential and BTL in one company"
Technically yes, but no mainstream lender will fund a residential property held by a limited company without it being structured as a director's residential lease — and the tax treatment is brutal (benefit-in-kind, ATED if over £500k). For practical purposes, the SPV holds investment property only. Your own home stays in your name.
Pros
- Full mortgage interest deductibility against corporation tax.
- Retained profits taxed at 19–25% rather than 40–45%.
- Easier to bring family members in as shareholders for inheritance planning.
- Mortgage panel is now broad — over 30 active SPV lenders.
- Cleaner separation between personal and business finances.
Cons
- Mortgage rates 0.3–0.7% higher than personal name.
- Personal guarantees neutralise true limited liability.
- Cannot transfer existing portfolio tax-free in most cases.
- Extra ongoing costs — annual accounts, corporation tax filing.
- Withdrawing profits as dividends triggers personal tax.
Practical setup checklist
- Speak to a property-specialist accountant before forming the SPV. The structure has to suit your tax position.
- Use SIC codes 68100, 68201, 68209 or 68320 — lenders look for these.
- Set up the company with all proposed directors and shareholders correctly from day one. Changes later trigger re-underwriting.
- Open a business bank account in the company's name. Lenders won't accept rent paid into personal accounts.
- Speak to a buy-to-let broker before committing to a lender — SPV criteria differ sharply across the panel.