SPV / Property Company Accountants

Pre-incorporation analysis is where the work starts. The breakeven between holding personally and incorporating into a SPV depends on: portfolio size and finance costs (the bigger the Section 24 hit, the stronger the case for incorporation), intended hold period (longer holds amortise the SDLT incorporation cost over more years), capital growth versus income strategy (corporation tax on disposal differs from CGT in personal hands), inheritance planning (SPV shares can be gifted with potentially different IHT treatment), and refinance timing (a refinance window aligned with incorporation reduces friction). Specialist accountants run the breakeven each year for high-finance-cost landlords; generalists usually default to "incorporate" without modelling the SDLT or stamp-duty-incurred cost properly.

SDLT on incorporation is the biggest single cost. Transferring properties from personal name to a SPV is treated as a sale-and-purchase for SDLT purposes — the 3% second-property surcharge applies to all properties (since the SPV is treated as not owning the properties before the transaction). The SDLT is calculated on the market value at the time of transfer. For a £2m portfolio, the SDLT bill on incorporation is typically £128-150k depending on the value-band split. Various reliefs may apply (incorporation relief, multiple dwellings relief, the 6+ properties rule for non-residential SDLT rates) — specialist accountants model each. Generalists frequently miss the multiple-dwellings-relief option entirely.

Annual corporation tax computation differs from personal SA. Currently 19% corporation tax up to £50k profits, marginal-rate up to £250k, 25% above. Mortgage interest is fully deductible (no Section 24 restriction for companies). Capital allowances on integral features and plant in property apply the same as personal hands. Dividend distribution to shareholders is taxed at dividend tax rates (8.75% basic, 33.75% higher, 39.35% additional) on amounts above the £500 dividend allowance. Director's loan accounts have to be tracked correctly to avoid the s455 corporation tax charge (currently 33.75% on overdrawn director's loans not repaid within 9 months of year-end).

Dividend timing for higher-rate landlords is a real annual planning exercise. Drawing dividends to top up income to the £100k threshold (where personal allowance starts tapering) is rarely optimal — the marginal effective rate above £100k can exceed 60% when the tapered allowance is lost. Specialist accountants model the year-end position and advise on the right dividend draw to maximise after-tax income. Generalists frequently leave excess profits in the company without modelling whether the corporation-tax-then-dividend route or the income-as-salary route is better in a given year.

Property company accounts under FRS 102 / FRS 105 — most property SPVs file as micro-entities under FRS 105 (turnover under £632k, balance sheet under £316k, employees under 10). FRS 105 accounts are minimal disclosure: balance sheet, P&L, single page of notes. SPVs above the micro-entity threshold (typically larger portfolios with material refurbishment activity) move to FRS 102 small company regime with abridged accounts available. Specialist accountants assess the framework choice each year; generalists frequently file under the wrong framework when a portfolio crosses the threshold.

Multiple Dwellings Relief on SPV incorporation — the relief applies where 2+ dwellings are transferred together, treating the average price per dwelling as the basis for SDLT calculation. Can reduce SDLT meaningfully on portfolios with mixed property values. Specialist accountants run MDR vs straight SDLT comparisons; generalists frequently default to per-property SDLT.

Director's loan account interest charge — when a director borrows from the company (overdrawn director's loan), HMRC requires interest at the official rate (currently 2.25%). The interest charged to the director is corporation tax income for the company; if not charged, HMRC will deem interest charged anyway and tax the company on phantom income. Generalists frequently leave the director's loan uninterested, creating a phantom-income exposure. Specialist accountants set up loan agreements with proper rates from day one.

Section 455 charge on overdrawn director's loans — overdrawn loans not repaid within 9 months of year-end attract a 33.75% corporation tax charge under Section 455 of CTA 2010. The charge is repayable when the loan is repaid, but it's a meaningful cash-flow hit in the meantime. Specialist accountants flag this proactively; generalists frequently miss the 9-month deadline.

Dividend cover and lender covenants — many property SPV mortgages have covenants requiring minimum dividend cover (Net Income / Dividends paid). Drawing dividends that breach covenants can trigger lender action. Specialist accountants check covenant compliance before signing off on dividends; generalists rarely verify the covenant position.

CGT on incorporation versus corporation tax on eventual disposal — incorporating a personally-held portfolio into a SPV triggers CGT at the property-sale CGT rates (28% on residential gains for higher-rate-tax landlords; 18% basic-rate). The SPV then holds the property at market value (its base cost = transferred market value). On eventual disposal by the SPV, corporation tax applies to the gain at corporation tax rates. The two-stage tax is sometimes worse than holding personally and disposing personally; sometimes better. Specialist accountants model both pathways; generalists default to one without comparing.

Annual confirmation statement and accounts deadline — SPVs file accounts at Companies House within 9 months of year-end, plus a CT600 corporation tax return within 12 months of year-end (paying corporation tax 9 months and 1 day after year-end). Plus an annual confirmation statement. Generalist accountants serving primarily property landlords occasionally miss SPV-specific deadlines because the cadence differs from personal SA. Specialist accountants integrate the SPV calendar into the practice management system.