Side-by-side comparison
| Dimension | Personal-name BTL | SPV (Ltd) BTL |
|---|---|---|
| Mortgage rate (avg, 75% LTV 5yr fix) | ~4.49-5.59% | ~5.19-6.09% |
| Deposit (typical) | 25% | 25% |
| Mortgage interest tax treatment | 20% basic-rate credit (post-Section 24) | Fully deductible business expense |
| Rental income tax rate | 20/40/45% income tax | 19-25% corporation tax |
| Dividend tax to extract profit | n/a — directly yours | 8.75/33.75/39.35% on extraction |
| SDLT | Standard + 5% surcharge (above 1 property) | Standard + 5% surcharge always |
| Set-up cost | £0 | ~£50 incorporation + ~£250-500 accountant setup |
| Ongoing admin | Self-Assessment only | Annual accounts + corporation tax + confirmation statement |
| Inheritance / succession | Personal estate | Share-based — easier to gift over time |
| Limited liability | No — personally liable | Yes for trading; personal guarantees standard on mortgage |
Tax treatment compared
Personal name
Rental income is taxed at your marginal income tax rate after deducting allowable expenses (repairs, letting agent fees, insurance, etc.). Crucially, mortgage interest is no longer a deductible expense for residential property since Section 24 fully phased in — you get a flat 20% basic-rate tax credit instead, regardless of whether you're a higher-rate (40%) or additional-rate (45%) taxpayer.
SPV (Limited Company)
Rental income inside the SPV is taxed at corporation tax rates: 19% on the first £50,000 of profit, marginal relief between £50,000 and £250,000 (effective rate ~26.5% on the slice), and 25% above £250,000. Mortgage interest is a fully deductible business expense.
To get money out of the SPV, you take dividends, which are then taxed personally at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate). There's a £500/year dividend allowance.
Mortgage differences
Rates: SPV BTL rates run 0.3-0.8% above equivalent personal BTL rates from the same lender. The premium reflects the smaller SPV market.
Lender panel: Personal BTL has ~80+ active lenders. SPV BTL has ~40 — still a healthy market but narrower.
Stress tests: Most SPV lenders apply the same RCR ratios as personal BTL (125% basic-rate, 145% higher-rate director), but the underlying stress rate is sometimes 50bp higher.
Personal guarantees: All SPV BTL mortgages require personal guarantees from directors — the limited-liability protection doesn't extend to the mortgage.
Documentation: SPV applications require additional documents — SPV incorporation cert, SIC code confirmation, director CV/proof-of-income, sometimes 12 months of SPV bank statements (if the company has been trading).
Worked example: £100k personal income, £250k BTL, £180k mortgage
Assumptions: £100,000 personal income (higher-rate taxpayer), buying a £250,000 BTL with a £180k mortgage at 5.5%. Rent £15,000/year. Other allowable expenses £1,500/year.
Personal name route (post-Section 24):
- Rental income: £15,000
- Less other expenses: £1,500
- Taxable rental income: £13,500
- Income tax at 40% on £13,500 = £5,400
- Less 20% credit on £9,900 mortgage interest = -£1,980
- Net tax owed: £3,420
- Cash kept = £15,000 rent - £9,900 mortgage interest - £1,500 expenses - £3,420 tax = £180
SPV route (assuming profits retained, not distributed):
- Rental income: £15,000
- Less mortgage interest: £9,900
- Less other expenses: £1,500
- Taxable profit: £3,600
- Corporation tax at 19%: £684
- Profit retained in SPV = £3,600 - £684 = £2,916
Difference: £2,736/year in retained-cash terms. If the landlord eventually pays themselves a dividend on the SPV profit at higher-rate dividend tax (33.75%), the after-tax extraction is around £1,930 — still 10× better than the personal-name route.
When each structure wins
Personal name wins if you are:
- A basic-rate taxpayer (20% income tax band) — Section 24's 20% credit matches what you'd have got anyway, and the SPV adds complexity for no benefit
- Buying a single property with no plans to add more
- Looking to leverage your own home's equity for a flexible BTL
- Holding a low-LTV property (under ~50%) — mortgage interest is a small share of cost, so the tax difference is small
SPV (Ltd) wins if you are:
- A higher-rate (40%) or additional-rate (45%) taxpayer with rental income above ~£5,000/year
- Building a portfolio of multiple properties
- Highly geared (LTV above ~70%)
- Planning to retain profits in the company to fund future deposits
- Thinking about long-term succession — shares are easier to gift over time than property
For most UK landlords starting fresh in 2025/26, the answer is SPV from day one. For established personal-name portfolios, the transfer costs (CGT + SDLT) usually outweigh the benefit — but new acquisitions should still go through an SPV.