What is an SPV, why set one up, tax advantages and disadvantages, setup costs and when an SPV makes sense for Turkish investors — a comprehensive guide.
An increasingly popular structure among Turkish investors buying investment property in London is purchasing through an SPV (Special Purpose Vehicle) rather than in their personal name. This structure offers significant tax advantages in some situations, but also involves important costs and restrictions that require careful consideration.
What Is an SPV?
A Special Purpose Vehicle (SPV) is a limited company with a separate legal identity, created for a single purpose — typically to hold property and generate rental income. It is registered at Companies House in England and set up as a standard Limited Company (Ltd).
The SPV purchases the property, collects rental income, reports expenses and profits or losses, and pays Corporation Tax.
The Core Tax Advantages of an SPV
1. Mortgage Interest Is Fully Deductible
This is the SPV's greatest advantage.
Since 2017, individuals who own buy-to-let properties personally can no longer deduct mortgage interest in full — only a 20% basic rate tax credit applies. For higher-rate taxpayers, this significantly increases the effective tax burden.
In an SPV, mortgage interest is fully deductible as an expense. This is a material advantage, particularly for investors using mortgage finance who fall into higher tax brackets.
2. Lower Tax Rate
Rental income in personal names can reach the highest 45% income tax band. In an SPV, profits are subject to Corporation Tax — 19% for small companies and 25% for larger ones as of 2026.
3. Extracting Cash via Dividends
Profits in an SPV can be extracted as dividends, which may be taxed at a lower rate than income tax — particularly when combined with the dividend allowance and low personal income.
4. Simplified Inheritance Planning
Placing property in an SPV makes it easier to transfer company shares to family members. Compared to direct property transfers, this offers lower SDLT costs and more flexible inheritance planning.
5. Flexibility for Portfolio Growth
When acquiring multiple properties, each can be placed in a separate SPV, or the entire portfolio consolidated under a single holding company.
The Disadvantages of an SPV
1. Higher SDLT (Stamp Duty)
Properties purchased in a company name attract a +3% corporate surcharge on top of standard SDLT rates. When the foreign buyer surcharge is also applied, the total additional charge is +5%.
Example: For a £1M property, personal purchase SDLT is approximately £93,750; with the corporate + foreign buyer surcharge, this can rise to approximately £118,750.
2. Mortgage Difficulties
Obtaining a mortgage in a company name is more difficult than personally. Higher interest rates, larger deposit requirements and fewer available lenders are typical. Some lenders will not lend to SPVs at all.
3. Running Costs
Keeping the company active generates annual costs for accountancy, Companies House filings and tax returns. Budget for an additional £1,500–£3,000 per year.
4. Personal Use Restrictions
If you personally occupy a property owned by the company, this creates a "benefit in kind" which is subject to taxation.
SPV Setup Cost and Process
Setup cost: £1,000–£3,000 (including legal and accountancy fees)
Timescale: Companies House registration is completed within 24–48 hours; opening a business bank account can take 2–4 weeks.
Documents required:
- Passport and proof of address (for KYC)
- Company name and SIC code (68100 — property management)
- Director and shareholder details
Does an SPV Make Sense for Turkish Investors?
An SPV is not the right structure for every investor. Assess against the following criteria:
| Situation | Is SPV Recommended? | |---|---| | Using a mortgage, higher-rate taxpayer | ✅ Yes — interest deductibility is a major advantage | | No mortgage, cash purchase, single property | ⚠️ Consider carefully — additional SDLT is a disadvantage | | Acquiring multiple properties | ✅ Yes — ideal for portfolio structuring | | Property to be sold in the short term | ❌ No — no CGT advantage on corporate asset sales | | Long-term inheritance planning | ✅ Yes — share transfer is more flexible than property transfer |
Important Warning
The SPV structure is a multi-layered subject under both English and Turkish tax law. How rental income and dividends are taxed in each country under the UK-Turkey double taxation treaty varies according to each investor's personal circumstances.
Before making this decision, always consult both a UK and a Turkish tax adviser.
Conclusion
The SPV structure is a powerful tool, particularly for Turkish investors using mortgage finance and planning to grow a portfolio. However, given the additional SDLT costs, mortgage restrictions and running expenses, it is not the right solution in every situation.
For further reading, see our guides on London stamp duty costs, Zone 1 investment advantages and buying property in the UK.
At Brick & Fortune, we support Turkish investors through SPV structuring and every stage of the London property investment process from our Knightsbridge office.
Frequently Asked Questions
How quickly can an SPV company be set up in the UK?
A UK SPV limited company can typically be incorporated within 24–48 hours via Companies House online registration. You will need to specify directors, shareholders, and the SIC code 68100 (buying and selling of own real estate).
Will I pay tax on rental income received through an SPV?
Yes. The company pays Corporation Tax on rental profits, currently 25% in 2026. However, mortgage interest, management fees, and maintenance costs can be deducted as business expenses, often making this more tax-efficient than personal ownership for higher-rate taxpayers.
Can an SPV property be mortgaged?
Yes, though fewer lenders offer SPV mortgages than personal ones. Interest rates for SPV mortgages typically range from 6.0–7.5%, and the process involves slightly more documentation than a personal purchase.
What happens when I sell the property held in an SPV?
You have two options: sell the property directly (subject to standard Corporation Tax on gains) or sell the company's shares (which may reduce SDLT for the buyer). The best approach depends on your tax situation — consult a specialist before deciding.
Is it better to hold multiple properties in one SPV or separate ones?
Common practice is one SPV per property. This provides risk isolation between assets and makes it simpler to finance or sell each property independently.