If you're a landlord operating in 2025, you've likely come across the question: Should I use an SPV or a trading company to hold my property portfolio? With tax rules evolving, lender preferences shifting, and portfolio structuring becoming more strategic than ever, this decision can significantly impact your returns.

In this guide, we break down what you need to know—so you can avoid costly mistakes and choose the best path for your investment future.

✅ What Is an SPV?

An SPV (Special Purpose Vehicle) is a limited company set up solely to hold property. Its purpose is specific, and that makes it predictable—for you and for lenders.

• 💼 Used exclusively for property letting or development
• 🏢 Typically has SIC codes like 68100, 68209, or 68320
• 📊 Clean balance sheet—no trading activity, no unrelated income

This simplicity is one of the main reasons mortgage lenders favour SPVs over standard trading companies.

🔄 What Is a Trading Company?

A trading company is a limited company that actively trades—meaning it buys and sells goods or services.

• 🛒 May operate as a shop, consultancy, agency, etc.
• 🧾 May have payroll, VAT obligations, business expenses
• 📚 More complex accounts with unrelated income sources

If you own a trading company and are considering holding property inside it, there are important implications to consider.

📌 Summary: SPV or Trading Company?

Goal: Build a buy-to-let portfolio
Best Structure: SPV

Goal: Refinance multiple properties
Best Structure: SPV

Goal: Develop property and exit
Best Structure: SPV or LLP

Goal: Run a primary business unrelated to property
Best Structure: Trading Company (kept separate)

If you're not sure, start with the cleanest structure: an SPV.

💸 Why Lenders Prefer SPVs in 2025

Lenders see SPVs as lower risk because they:

• Are easier to underwrite
• Offer clearer income and cost visibility
• Limit exposure to unrelated business liabilities
• Allow portfolio structuring with more flexibility

If you’re aiming for multiple properties, complex refinance, or want to limit personal liability, lenders in 2025 almost always prefer SPV structures.

🧾 What About Tax Differences?

While both SPVs and trading companies pay Corporation Tax (25%), how you extract profits and report income can differ:

• SPVs are easier to ring-fence for tax and IHT planning.
• Trading companies often have payroll, dividends, and mixed deductions that complicate tax strategy.
• Using an SPV allows for cleaner financial separation—something your accountant and future buyers will thank you for.

And under current UK tax treatment, mortgage interest is fully deductible in SPVs, unlike personal name ownership.

🛡️ Asset Protection & Liability

Holding property in an SPV means your investment is isolated from your personal or business liabilities. Trading companies, by contrast, expose property assets to risks from your wider trading activity.

In an era of economic unpredictability and rising insolvency risks, ring-fencing assets in an SPV can offer peace of mind.

🏁 When Might a Trading Company Be Better?

There are a few edge cases where using a trading company might make sense:

• You're developing property as part of your main business (e.g. a construction firm).
• You plan to use business profits to purchase property directly—without setting up a new entity.
• You need to move quickly and already have funds in the trading company.

Even then, it's essential to take advice. Most landlords are better served by separating their investment structure.

👥 Common Mistakes to Avoid

• ❌ Mixing property and trading income in one company—it makes accounts messy and limits mortgage access.
• ❌ Using the wrong SIC codes—many lenders will decline your case.
• ❌ Assuming your accountant will sort it all out—this is a lending AND tax strategy decision.

🧠 Expert Tip from Willow

At Willow Private Finance, we regularly help clients restructure their property portfolios for maximum lender access, tax efficiency, and future growth.

We’ve worked with landlords who saved five figures simply by switching from personal or trading company ownership to SPVs.

If you’re scaling—or planning to—start smart.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.