Setting up a UK limited company for property investment: SPVs, SIC codes, and compliance essentials

Over the past decade, the UK property landscape has shifted decisively towards incorporation. Changes to mortgage interest tax relief for individual landlords, rising personal tax rates on rental income, and tighter lending criteria have made buying and holding property through a limited company the default strategy for serious investors. Whether you are purchasing your first buy-to-let or structuring a multi-property portfolio, the limited company route offers tax planning flexibility that personal ownership increasingly does not.

But forming a property company is not quite the same as forming a standard trading company. The SIC codes matter. The share structure matters. The choice between a single holding company and separate Special Purpose Vehicles (SPVs) matters — not least because your mortgage lender will have opinions. And since 18 November 2025, every director must complete identity verification under the Economic Crime and Corporate Transparency Act (ECCTA) before Companies House will accept an incorporation.

This guide walks you through the entire process: why investors incorporate, how to choose the right structure, which SIC codes to use, how to register with HMRC, and what ongoing compliance obligations to stay on top of. It is the guide we wish every property investor had before their first phone call with a mortgage broker.

Why property investors use limited companies

The shift to corporate ownership accelerated after April 2017, when the UK government began phasing in Section 24 of the Finance (No. 2) Act 2015. Before Section 24, individual landlords could deduct their full mortgage interest from rental income before calculating tax. The restriction phased in over four years and from April 2020 onwards, individual landlords receive only a basic-rate (20%) tax credit on their finance costs — regardless of whether they pay tax at the higher or additional rate. For a higher-rate taxpayer with significant mortgage debt, the effective tax bill on rental income increased dramatically.

Companies are not affected by Section 24. A limited company can deduct mortgage interest in full as a business expense before arriving at its taxable profit. That profit is then subject to Corporation Tax at either the 19% small profits rate (on profits up to £50,000) or the 25% main rate (on profits above £250,000), with marginal relief for profits in between. For many landlords, particularly those with leveraged portfolios, the Corporation Tax bill is meaningfully lower than the personal income tax bill would be.

Beyond the mortgage interest deduction, there are several other reasons investors choose to incorporate:

• Retained profits grow inside the company. You only pay personal tax (via dividends or salary) when you extract money. Profits left inside the company compound at the corporate rate, giving you more capital to reinvest in the next property.
• Flexible income extraction. As a director-shareholder, you can draw a combination of salary and dividends in the most tax-efficient way for your circumstances. Our guide on paying yourself as a director explains the mechanics.
• Limited liability. A company is a separate legal entity. In principle, your personal assets are ring-fenced from business liabilities — though mortgage lenders often require personal guarantees for property company loans, which partially offsets this benefit.
• Succession planning. Transferring company shares to family members is often simpler and more tax-efficient than transferring individual properties. Using different share classes (for example, alphabet shares) lets you split income between shareholders in a controlled way.
• Professional credibility. A registered company with a proper registered office, a clean Companies House record, and filed accounts signals to lenders, agents, and joint-venture partners that you are a serious operator.

When incorporation may not be the right move

Incorporation is not universally advantageous. If you already hold properties personally, transferring them into a company triggers Stamp Duty Land Tax (SDLT) on the market value (not the original purchase price), plus potential Capital Gains Tax on the disposal. For an unencumbered portfolio with significant equity, the upfront tax cost can wipe out years of corporate tax savings. Incorporation works best when you are buying new properties directly into the company from the outset, or when the long-term tax savings clearly outweigh the transfer costs. This is a decision for your accountant, not a blog post.

SPV vs trading company: choosing the right structure

Once you have decided to incorporate, the next question is how many companies do you need? Property investors generally choose between two approaches.

Option 1: A single trading company

You form one limited company and hold all your properties inside it. This is the simplest structure. You have one set of accounts to file, one confirmation statement, one Corporation Tax return, and one company to administer. It suits investors who plan to build a modest portfolio (say, up to five or six properties) and want to keep things simple.

The downside is that all properties sit inside one legal entity. If something goes wrong with one property — a major liability claim, for example — every asset in the company is exposed.

Option 2: Separate SPVs (Special Purpose Vehicles)

An SPV is simply a limited company formed for a single, narrow purpose — in this case, to hold one property (or a small cluster of related properties). Many professional landlords and property developers form a new SPV for each purchase.

The advantages are meaningful:

• Ring-fenced risk. A liability attached to one property does not threaten the others. Each SPV is a separate legal entity.
• Easier to sell. Selling an SPV (by transferring its shares) can be more tax-efficient than selling the property directly, because the buyer acquires the company rather than the asset — potentially avoiding SDLT on the property itself. This is a well-established strategy for commercial and higher-value residential deals.
• Lender preference. Many specialist buy-to-let mortgage lenders require an SPV structure. They want the property to sit in a clean company with no trading history, no other debts, and specific SIC codes. If you are financing through a BTL lender, check their SPV requirements before you incorporate — some insist on particular SIC codes and object types in the articles.

The trade-off is administration. Each SPV needs its own annual accounts, confirmation statement, Corporation Tax return, and ongoing compliance. For a portfolio of ten properties in ten SPVs, that is ten sets of everything. This is where a service like Filing HQ earns its keep — we can handle the Companies House filings for each SPV so you are not buried in paperwork.

The holding-company approach

Some investors create a holding company that owns the shares of each SPV. The holding company does not own any property directly; it simply holds the SPVs. This gives you centralised control, cleaner succession planning, and potentially easier group financing — but adds another layer of administration and accounting. For most investors with fewer than ten properties, the additional complexity is not justified.

Step-by-step: forming your property investment company

Whether you are forming a single company or your first SPV, the incorporation process follows the same steps. Here is the practical sequence.

1. Choose a company name. The name must be unique on the Companies House register. Many SPV investors use a systematic naming convention (e.g. "Smith Property 1 Ltd", "Smith Property 2 Ltd") to keep things organised. You can change the name later for £20 online if needed.
2. Pick the right SIC codes. This is more important for property companies than for most other businesses. Your mortgage lender may reject your application if the SIC code does not match their requirements. We cover the right codes in the next section.
3. Decide on your share structure. A simple setup is 100 ordinary shares at £1 each. If you plan to bring in a spouse, family member, or co-investor, consider using different share classes from day one. This is easier to set up at incorporation than to retrofit later.
4. Set your registered office address. Your registered office appears on the public Companies House register. Using your home address exposes it to anyone who searches for the company. A professional registered office address keeps your personal address off the public record. Read our guide on the risks of using a home address if you are weighing this up.
5. Complete identity verification for every director. Since 18 November 2025, all directors must verify their identity before Companies House will process the incorporation. You can do this directly through GOV.UK One Login (free) or through an Authorised Corporate Service Provider (ACSP) like Filing HQ. The verification is a one-off — once verified, the same ID works for future appointments and company formations. See our identity verification guide for the full process.
6. Submit the incorporation. Online incorporation costs £100 and typically completes within 24 hours. Paper applications cost £124. If you need same-day processing, the fee is £156. Through Filing HQ, we handle the entire application, articles of association, and identity verification as a single package.
7. File a PSC notification. If any individual holds more than 25% of the company's shares (which they almost certainly will in a new property SPV), they must be registered as a Person with Significant Control. This is usually handled at incorporation, but verify it is correct on your Companies House record. See our PSC filing guide.

Once incorporated, follow our post-incorporation checklist for the immediate next steps.

SIC codes for property companies

Your Standard Industrial Classification (SIC) code tells Companies House, HMRC, and mortgage lenders what your company does. Getting this wrong is one of the most common mistakes property investors make — and one of the most consequential, because some BTL lenders will reject mortgage applications if the SIC code does not match their lending criteria.

Here are the SIC codes most relevant to property investment companies:

• 68100 — Buying and selling of own real estate. Use this if the company will buy properties with the intention of selling them (property trading or development).
• 68201 — Renting and operating of Housing Association real estate. Rarely relevant for private investors.
• 68202 — Letting and operating of own or leased real estate. This is the most common code for buy-to-let investors. If you are buying properties to hold and rent out, this is almost certainly the one you need.
• 68209 — Other letting and operating of own or leased real estate. A catch-all for property activities that do not fit neatly into 68202 (e.g. serviced accommodation, short-term lets).
• 68310 — Real estate agencies. For companies providing estate agency services to others, not for holding your own properties.
• 41100 — Development of building projects. For companies carrying out property development or construction.

Most buy-to-let SPVs should use 68202 as the primary code. If you also plan to sell properties, add 68100 as a secondary code. You can list up to four SIC codes at incorporation.

Check with your mortgage broker before incorporating. Some lenders require specific SIC codes and will not lend if the company was formed with the wrong one. While you can change your SIC code on the next confirmation statement, it is easier to get it right from the start.

Tax registration and compliance essentials

Incorporating a property company creates a legal entity. It does not, by itself, trigger any HMRC obligations. Those begin when the company starts business activity — which includes signing a purchase contract, receiving rental income, advertising for tenants, or incurring expenses related to the property business.

Corporation Tax

You must register for Corporation Tax within three months of starting business activity. This is not three months from incorporation — an important distinction if you form the company weeks or months before you complete your first purchase.

Corporation Tax is charged on the company's taxable profits:

• 19% small profits rate on profits up to £50,000
• 25% main rate on profits above £250,000
• Marginal relief for profits between £50,000 and £250,000 (the effective rate tapers between the two)

These thresholds are divided by the number of associated companies. If you have five SPVs, the £50,000 small profits threshold becomes £10,000 per company. This is a critical consideration when deciding between an SPV and single-company structure — discuss it with your accountant.

The CT600 (Corporation Tax return) is due 12 months after the end of the accounting period. The tax itself must be paid 9 months and 1 day after the period ends. Late filing penalties for CT600 returns with a filing date on or after 1 April 2026 are £200 if up to 3 months late, rising to £400 if more than 3 months late. Persistent late filing (three in a row) attracts penalties of £1,000 or £2,000, plus tax-geared penalties of 10% of unpaid tax at 6 months and a further 10% at 12 months.

VAT registration

Residential rental income is exempt from VAT, so most buy-to-let companies never need to register. VAT registration only becomes mandatory if the company's taxable turnover (not exempt turnover) exceeds £90,000 in any rolling 12-month period. This might be relevant if the company also undertakes property development, earns commercial rent (where the option to tax has been exercised), or provides other taxable services. See our VAT registration guide for details.

PAYE

PAYE registration is only required if the company pays salaries — either to employees or to a director drawing a regular wage. It is not triggered by incorporation or by paying dividends. If you plan to pay yourself a salary from the property company (a common tax-planning strategy to use the personal allowance and National Insurance thresholds), register for PAYE before the first payday — ideally at least two weeks before.

Stamp Duty Land Tax (SDLT)

A company buying residential property pays SDLT at the higher rates for additional dwellings, which include a 5% surcharge (increased from 3% on 31 October 2024) on top of the standard residential rates, where the price is £40,000 or more. There is also a flat 17% rate (increased from 15% on 31 October 2024) where a company buys a single residential dwelling costing more than £500,000, unless a relief applies (for example, where the property is bought for a genuine property-rental business). Model the SDLT cost carefully before buying — it is often the largest single upfront cost.

Annual Tax on Enveloped Dwellings (ATED)

If your company holds a residential dwelling valued at more than £500,000, it falls within ATED. Genuine buy-to-let companies letting to unconnected tenants can usually claim a relief that reduces the charge to nil — but you must still submit an ATED relief declaration return each year to claim it. Missing that return can lead to penalties even where no tax is due, so it is easy to overlook.

Ongoing Companies House compliance

A property company has the same Companies House obligations as any other UK limited company. The difference is that SPV investors often have multiple companies, which makes it easy to miss a deadline on one while attending to another. Here are the key recurring obligations.

Confirmation statement (CS01)

Due every 12 months from incorporation, with a 14-day filing window after the review period ends. The online fee is £50 (paper: £110). The statement must be filed even if nothing has changed — confirming that nothing changed is the confirmation. Missing it leads to strike-off proceedings. Our confirmation statement guide covers the process in detail, and Filing HQ's confirmation statement service handles the filing for you.

Annual accounts

Your first set of accounts is due 21 months from the date of incorporation. Subsequent accounts are due 9 months after the accounting reference date. Late filing penalties start at £150 and climb to £1,500 for private companies — and the penalty doubles if you file late two years running. Many property SPVs qualify to file micro-entity accounts, which are significantly simpler. Speak to your accountant about whether your company qualifies.

Statutory registers

Since 18 November 2025, ECCTA has reduced the statutory registers a company keeps itself. Companies House now holds the central record of directors, directors' residential addresses, secretaries, and PSCs, so you no longer maintain those registers internally. What you still keep is:

• Register of members (shareholders) — at your registered office or a SAIL address
• Copies of any charge instruments — where the company has granted security over its assets

The register of members remains the company's authoritative legal record of share ownership — the public Companies House register is not a substitute for it. You must still notify Companies House of director and PSC changes within 14 days. Accounting records must be retained for at least 6 years from the end of the accounting period.

Director changes and PSC updates

If you appoint or remove a director, file the relevant form (AP01 or TM01) within 14 days. There is no Companies House fee. Any changes to PSC details must also be notified within 14 days using the appropriate PSC form (PSC01 through PSC09). PSC filings are free. Every new director must complete identity verification before the appointment can be registered.

Common mistakes property investors make

After helping hundreds of property investors through the formation and compliance process, these are the errors we see most often.

1. Using the wrong SIC code

The most common and costly mistake. A buy-to-let investor selects SIC code 68100 (buying and selling) instead of 68209 or 68202 (letting and operating), or worse, a completely unrelated code. Their mortgage application is rejected weeks later because the lender's criteria require a specific code. While SIC codes can be corrected on the next confirmation statement, the delay can derail a time-sensitive purchase.

2. Using a home address as the registered office

Your registered office address is publicly visible on the Companies House register. For a property company, this means tenants, agents, and anyone else can find your personal address with a simple search. A professional registered office costs far less than the privacy risk.

3. Forgetting to register for Corporation Tax

Corporation Tax registration is required within three months of starting business activity. Some investors assume it happens automatically or that it is only needed once rental income arrives. In reality, signing a purchase contract or incurring expenses (legal fees, survey costs) can constitute the start of business activity. Late registration does not trigger a fine in itself, but it delays the Unique Taxpayer Reference (UTR) you need for your first tax return.

4. Letting confirmation statements lapse

This is particularly common with SPV portfolios. An investor has four or five companies and loses track of which one is due when. A missed confirmation statement leads to strike-off proceedings. Restoring a struck-off company can cost hundreds of pounds and take several weeks or longer — all while the property sitting inside it is legally owned by an entity that no longer exists. Filing HQ's confirmation statement service tracks every deadline across your portfolio.

5. Not separating personal and business finances

While a business bank account is not legally required for a UK limited company, mixing personal and property company finances undermines the limited liability protection, complicates accounting, and makes mortgage applications harder. Most BTL lenders require the company to have its own bank account. Open one before you start transacting. Our guide on opening a business bank account covers the options.

6. Ignoring identity verification

Since 18 November 2025, identity verification is mandatory for all directors. Companies House will not process an incorporation or director appointment without it. Some investors discover this at the point of filing and face unexpected delays. Complete your verification early — it is a one-off process and can be done through Filing HQ as an ACSP or directly via GOV.UK One Login.

Extracting profits from a property company

Rental profits accumulate inside the company at the Corporation Tax rate, but at some point you will want to access that money personally. The two main routes are:

• Salary. A tax-deductible expense for the company, but subject to income tax and National Insurance for you personally. Many property company directors pay themselves a small salary up to the National Insurance Primary Threshold to maintain NI credits without triggering a significant tax bill.
• Dividends. Paid from post-tax profits. No National Insurance, but subject to dividend tax. From 6 April 2026, the rates are 10.75% (basic rate), 35.75% (higher rate), and 39.35% (additional rate). Combined with the Corporation Tax already paid, the total effective rate on rental profits can still be lower than the personal income tax rate on the same rental income held individually — particularly for higher-rate taxpayers.

Director loan accounts are another route — borrowing money from your own company — but these carry their own tax implications (Section 455 Corporation Tax charges if not repaid within nine months of the year-end, and potential benefit-in-kind charges). Get advice from your accountant before using this route regularly.

Closing a property company

When you eventually sell all the properties and want to wind down the company, the tax treatment depends on how much is left inside it. For distributions up to £25,000, a simple voluntary strike-off can allow the distribution to be treated as capital (potentially qualifying for Business Asset Disposal Relief). Above that threshold, the entire distribution is taxed as income unless you use a Members' Voluntary Liquidation (MVL).

The Business Asset Disposal Relief rate is 18% from 6 April 2026, on a lifetime limit of £1 million. Be aware that HMRC's targeted anti-avoidance rule (TAAR) can reclassify a capital distribution as income if you continue a similar trade within two years of the distribution. This is particularly relevant for property investors who close one company and open another.

Director duties in a property company

As a director of a property company, you have the same statutory duties as any other UK company director. These are codified in sections 171–177 of the Companies Act 2006:

• Act within powers (s. 171) — exercise your powers for the purposes for which they were conferred
• Promote the success of the company (s. 172) — act in the way you consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole
• Exercise independent judgement (s. 173)
• Exercise reasonable care, skill, and diligence (s. 174)
• Avoid conflicts of interest (s. 175)
• Not accept benefits from third parties (s. 176)
• Declare interest in proposed transactions (s. 177)

In the context of a property company, these duties have practical implications. You must maintain the properties, keep proper accounts, pay debts as they fall due, and not extract money for personal use in ways that prejudice creditors. If the company becomes insolvent, you face potential personal liability for wrongful trading (s. 214, Insolvency Act 1986) and fraudulent trading (s. 213, Insolvency Act 1986). For a deeper look at what these mean in practice, read our director duties and personal liability guide.

Frequently asked questions

Can I transfer existing properties from personal ownership into a limited company?

Technically yes, but it is treated as a disposal and a new acquisition. You will likely pay Capital Gains Tax on the disposal from personal ownership, and the company will pay Stamp Duty Land Tax on the market value of the property. The additional 5% SDLT surcharge for purchases by companies (on properties over £40,000) also applies. Whether it is worthwhile depends on the numbers — consult your accountant to model the tax cost against the long-term Corporation Tax savings.

Do I need a separate bank account for each SPV?

Yes, in practice. While there is no legal requirement for a UK limited company to have a bank account at all, each SPV is a separate legal entity and should have its own account to maintain the ring-fencing that makes the SPV structure worthwhile. Most BTL lenders require it. Some banks offer multi-entity property accounts that make managing multiple SPVs easier.

What SIC code do BTL mortgage lenders require?

Requirements vary by lender, but most specialist BTL lenders want to see 68202 (letting and operating of own or leased real estate) or 68209 (other letting and operating). Some accept 68100 (buying and selling) as a secondary code. Always confirm with your mortgage broker or lender before incorporating, as their criteria may be specific.

Does my property company need to register for VAT?

Residential letting income is exempt from VAT, so it does not count towards the £90,000 registration threshold. If the company also earns taxable income (for example, from commercial property where the option to tax has been exercised, or from property management services), that taxable turnover could trigger mandatory VAT registration. For most residential-only landlords, VAT registration is not required.

How much does it cost to set up a property SPV?

The Companies House incorporation fee is £100 online. Add a registered office address to keep your personal address off the register, and you are looking at a modest annual cost for each SPV. The bigger ongoing expense is the accounting fee — each SPV needs its own annual accounts and Corporation Tax return. This is why many portfolio investors work with accountants who specialise in property company structures and offer multi-company pricing.

Can a non-UK resident set up a UK property company?

Yes. There is no UK residency requirement for directors of a UK limited company, and nationality is irrelevant. Every company must have at least one director who is a natural person (an individual, not another company) and who is at least 16 years old. The director must complete identity verification and must not be disqualified or an undischarged bankrupt. Non-resident directors should be aware that the company's tax residency depends on where it is managed and controlled — there are additional HMRC considerations. See our guide on running a UK limited company from abroad.