Our sister company, Churchill Knight & Associates Ltd, has a dedicated landlord accountancy service designed specifically for landlords who purchase and manage properties for buy-to-let activities. You will be given access to your own FreeAgent account, helping you manage your business and stay on top of your finances from initial set up of your special-purpose vehicle company (SPV) and to year-end accounts and beyond. Your dedicated Account Manager will give you tailored tax planning and advice so you get the most out of your SPV company.
What is an SPV and how does it work?
It is a limited company which is set up for the sole purpose of managing and purchasing property for buy-to-let activities. An SPV is considered a ‘bankruptcy-remote entity’ as the company’s operations are limited to the financing and purchasing of certain assets. You can hold as many properties as you like within an SPV, allowing you to develop and grow your buy-to-let portfolio.
Advantages of using an SPV?
There are many advantages of using a SPV company to purchase property for buy-to-let activities. We’ve compiled a short list for your information:
- You isolate your financial risk as the SPV operates as its own entity.
- Normal buy-to-lets are taxed as part of your personal income and you will be subject to Capital Gains Tax. Whereas, SPV’s are subject to Corporation Tax which is charged at 19% (dropping to 18% in 2020). This may work out cheaper for some investors.
- You can build your property portfolio quickly as the SPV can be used for multiple properties.
- HMRC has committed to phasing out the ability to put through mortgage interest as an expense if you are operating as a sole trader – this is not the case with the SPV model. You are also able to claim tax relief on service charges and repairs.
- If you purchase property through an existing company you will be unable to close that company down via a Members Voluntary Liquidation (MVL). However, if you use an SPV company to purchase property you can keep the two companies as separate entities and will not lose the benefit of an MVL and withdrawing retained profits efficiently.
What does the landlord accountancy service include?
- Access to a FreeAgent account with the following benefits: tax timeline, expense tracker and invoice tracker
- All tax registrations with HMRC completed on your behalf
- Free SPV limited company set up
- Minimal ongoing administration
- Full sets of annual accounts prepared and submitted to HMRC on your behalf
- Unlimited support from a dedicated Account Manager via phone and email