SPV, LLP, or Ltd: which structure is right for your property portfolio?

One of the most common questions property investors ask is also one of the hardest to answer without knowing the specifics: should I hold my properties in a Special Purpose Vehicle, a Limited Liability Partnership, or a straightforward limited company? The honest answer is that all three can be correct depending on your circumstances — and the difference in tax outcomes over ten years can run to hundreds of thousands of pounds.

A Special Purpose Vehicle is simply a limited company set up for a specific purpose — typically a single development project or a defined portfolio acquisition. It is incorporated at Companies House, files corporation tax returns, and offers the same liability protection as any other limited company. The key advantage of an SPV is ring-fencing: each project sits in its own legal entity, so a loss on one development cannot infect another. Lenders often require SPV structures for buy-to-let mortgage lending. The disadvantage is administrative overhead — each SPV needs its own accounts, tax returns, and banking arrangements.

A standard limited company structure pools all properties under one entity. Corporation tax applies at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. The company can claim mortgage interest as a business expense in full — a significant advantage over personal ownership, where higher-rate taxpayers now receive only a 20% basic-rate tax credit under Section 24. Profit extraction is the challenge: any money you take out as salary or dividends is taxed again. Dividend tax rates rose 2% from April 2026, bringing the higher-rate dividend tax to 35.75%. For active investors who want to reinvest rather than extract, the corporate wrapper makes sense. For those who need regular income from their portfolio, the double-taxation problem is real.

A Limited Liability Partnership offers a different model. Unlike a company, an LLP is tax transparent: profits flow through to the partners and are taxed at their marginal income tax rates. There is no corporation tax at the entity level. For higher-rate taxpayers this sounds unattractive, but the LLP structure is particularly powerful for two scenarios. First, gifting: you can transfer an interest in an LLP to a family member in a lower tax bracket, shifting future income and capital gains to them without triggering an immediate CGT event (subject to conditions). Second, succession planning: LLP interests can often be structured to benefit from Business Property Relief for inheritance tax purposes, though the 2026 £2.5 million cap must now be factored in.

The Stamp Duty Land Tax position differs across structures too. An individual buying a property in their own name pays standard SDLT rates. A company or LLP purchasing residential property pays the 5% additional-dwelling surcharge on top of standard rates. Above £500,000, a company purchasing residential property may also face the 15% higher rate, unless it meets the genuine property rental business or property development exemptions. On a £1 million residential acquisition, the difference between the individual rate and the company rate can exceed £100,000 in SDLT alone.

Capital Gains Tax treatment is another point of distinction. Individuals selling residential property pay 18% or 24% CGT depending on their income. Companies pay corporation tax at 19–25% on gains — with no annual exempt amount. On disposal, a company that has benefited from mortgage interest relief throughout the holding period may still end up paying similar or greater total tax than an individual on exit, particularly if profits trapped in the company are then extracted as dividends.

So when does each structure win? Use an SPV when a lender requires it, when you want to ring-fence risk on a specific development, or when you plan to bring in joint venture partners who need a clean equity structure. Use a standard limited company when you are a higher-rate taxpayer with significant mortgage financing, plan to retain and reinvest profits over several years, and have a long holding period before exit. Use an LLP when you have family members in lower tax brackets who can legitimately participate in the business, when succession planning is a priority, or when you want tax transparency without forfeiting limited liability.

The worst outcome is choosing a structure reactively — buying in your personal name because it was simplest at the time, then facing a costly incorporation later. Transferring properties into a company triggers SDLT on market value and a potential CGT charge. Restructuring is expensive. Getting the structure right before you buy the first asset is almost always cheaper than fixing it afterwards.

At Stertha Advisory, structuring property portfolios for tax efficiency is one of our core specialisms. We work through the numbers for each client's specific situation — income level, mortgage position, exit timeline, family circumstances — before recommending a structure. Book a consultation and let us run the analysis.