Over the past few years, a growing number of landlords have been exploring SPV structures for one big reason: tax.
Since the government phased out full mortgage interest relief for individual landlords, many have seen their tax bills creep up — especially those in the higher income brackets. Companies, on the other hand, can still treat mortgage interest as a business expense, which can make a big difference to the bottom line.
Add in the fact that companies are currently taxed at a lower rate than individuals on higher income, and suddenly the idea to set up SPV property limited company formation becomes a lot more appealing.
Here’s the Catch: It’s Not Just a Paper Shuffle
We get this a lot: “Can’t I just move my properties into the company I’ve set up?”
Unfortunately, it doesn’t quite work that way. When you transfer a property from yourself to a company, it’s treated as a sale — even if you’re the only shareholder in the business. That means the company is technically “buying” the property from you, and that comes with two main tax hits:
- Capital Gains Tax (CGT) — You’ll need to pay CGT on the gain you’ve made since you originally bought the property, based on today’s market value.
- Stamp Duty Land Tax (SDLT) — Your company will also need to pay SDLT on the purchase, including the extra 3% surcharge that applies to second homes or investment properties.
These costs can be significant, especially if you’re dealing with multiple properties or a portfolio that’s grown a lot in value.
So, What Do I Need to Do?
When transferring property to a company, here are the key steps to follow:
- Step 1: Get Advice Start with a good accountant or tax adviser who understands property — not just general business. They’ll help you map out your tax position and spot any reliefs.
- Step 2: Set Up the Company You’ll need to set up SPV property limited company with the right SIC code (68100 or 68209 are the usual ones for property). Make sure you structure the company properly from the start — this can save a lot of hassle later.
- Step 3: Learn About Mortgage If you’ve got mortgages on the properties, you’ll need to refinance them into the name of the company. This might involve slightly higher rates and stricter lending criteria, so be prepared.
- Step 4: Legal Transfer A solicitor will handle the legal side of the transaction, including conveyancing, updating the land registry, and managing the stamp duty paperwork.
- Step 5: Tax Reporting Your accountant will file the necessary CGT returns and make sure everything is in order with HMRC.
Should I Move My Property?
It depends. For many landlords with a medium to large portfolio, especially those planning to grow or reinvest profits, incorporating can be a smart move. But it’s not right for everyone and getting it wrong can be expensive.
As always, the best place to start is with a conversation. Talk to a professional who understands the ins and outs of property tax and corporate structuring. And if you’re seriously thinking about making the jump, start planning early. The sooner you understand the implications, the better prepared you’ll be to make the most of it.
Common Mistakes When Filing Confirmation Statements and How to Avoid Costly Penalties
Maintaining proper compliance with Companies House regulations is essential for UK businesses of all sizes. One of the most routine yet critical tasks is to file confirmation statement documents accurately and on time. Despite its apparent simplicity, many company directors continue to make errors that can lead to unnecessary complications and expenses. Understanding these common pitfalls can help your business maintain perfect compliance and avoid the associated penalties that come with mistakes.
Perhaps the most frequent error is simply missing the filing deadline. Your confirmation statement must be submitted within 14 days of the end of your review period, which typically falls on the anniversary of your company’s incorporation or your previous statement filing. Many directors mistakenly believe they have 14 days from receiving the Companies House reminder email, but this timing is not guaranteed. Setting up automatic calendar reminders several weeks before your actual deadline provides a crucial buffer to gather necessary information and complete the filing process without rushing.
Another prevalent mistake involves confusing the confirmation statement with annual accounts. While both are annual filing requirements, they serve completely different purposes and have separate deadlines. The confirmation statement verifies company information such as registered office, directors, shareholders, and share capital, while annual accounts report on the company’s financial position. Mixing up these deadlines or assuming one filing covers both requirements can result in compliance failures on both fronts.
Inaccurate reporting of People with Significant Control (PSC) information represents another serious error. Since 2016, companies must identify and report individuals who ultimately own or control the company. Failing to update PSC information is not merely an administrative oversight but a legal violation that can result in the company and its officers facing criminal charges. Reviewing your PSC information thoroughly before submission ensures you avoid these potentially serious consequences.
Many directors also make the mistake of failing to separately notify Companies House of certain changes when they occur throughout the year. While the confirmation statement verifies information, specific changes like appointing new directors, issuing new shares, or changing your registered office must be reported separately when they happen. Waiting to report these changes on your confirmation statement means you’re potentially operating in violation of Companies House requirements for months.
The consequences of these mistakes extend beyond the immediate administrative penalties. Repeated compliance failures create a permanent public record visible to potential investors, lenders, and business partners. Many companies find their creditworthiness affected by a history of late filings or notice-related penalties. Additionally, directors with patterns of non-compliance may face increased scrutiny when forming new companies or taking positions with other businesses.
By understanding these common errors and implementing simple systems to avoid them, you can ensure your confirmation statement filing process remains smooth and compliant, protecting both your company’s legal standing and its reputation in the marketplace.
