SPV’s also known as a special purpose vehicle limited company. It’s a special company that is commonly used to purchase buy-to-let properties in the United Kingdom. SPV companies are used only for buy-to-let and do not carry out any other form of trading. If you are planning to buy a property under a limited company, a Mortgage lender will usually request you set up a separate limited company ( SPV), as they will not allow you to get buy to let property under a trading company, so you need the services of SPV accountants for your company.
There are several tax benefits available, e.g
– If you are a high rate taxpayer ( 40%, the company on the rental income will only pay 19%(2018/2019) corporation tax.
– If you take dividends of up to £2,000 a year, there will be no extra personal tax to pay. – You will be able to reinvest any retained profits without paying any Personal tax as long as you buy any future property under the same company.
– You will be able to expense the finance cost which includes the mortgage interest under SPV.
If you are looking to buy the properties under a limited company, we can assess your personal circumstances/tax position and can guide you in the right direction. Our fee to set up an SPV only starts from £100 plus vat, whereas year-end accountancy fee for SPV starts from £800 plus vat per year.