Statutory accounts and corporation tax for property companies and SPVs — including the associated companies rule that quietly divides your 19% band, and what it now costs to get the money out after the April 2026 dividend rise.
Lenders like an SPV per property. Solicitors set them up quickly. Nothing about the process flags the consequence, which is that the corporation tax bands are divided between all of them. The £50,000 small profits limit and the £250,000 main rate threshold are divided by the number of associated companies plus the company itself, and reduced for accounting periods shorter than twelve months.
So a landlord with four companies does not get four £50,000 bands. Each company gets £12,500 and £62,500. A company earning £40,000 of profit, which would have paid 19% throughout on its own, is instead in marginal relief at an effective rate above 19%. Multiply that across the group and it is the largest avoidable cost in most SPV structures.
The second surprise is extraction. A property company is efficient right up to the moment you need the money personally, and 6 April 2026 made that moment more expensive.
Corporation tax
From 1 April 2023 the main rate is 25% on profits above £250,000 and the small profits rate is 19% at or below £50,000, with marginal relief between the two. Both limits are divided by the number of associated companies and pro-rated for short periods.
| Companies in the group | Small profits limit | Main rate threshold |
|---|---|---|
| 1 | £50,000 | £250,000 |
| 2 | £25,000 | £125,000 |
| 4 | £12,500 | £62,500 |
Illustrative only. A landlord has three associated companies alongside the one being considered, so it is one of four. Its profit for the year is £40,000. On its own, that profit sits entirely inside the £50,000 small profits limit and is taxed at 19%. As one of four, the limits are £12,500 and £62,500, so £40,000 sits between them and the company is in marginal relief — at an effective rate above 19% on the same profit, with no change whatsoever to the trading.
The point is not that the arithmetic is unfair. It is that the divisor is decided by how the structure was built, usually years earlier, by somebody solving a lending problem rather than a tax one.
Section 24 does not apply to companies. HMRC's Property Income Manual states that companies carrying on a property business are not affected by the finance cost restriction, so mortgage interest is fully deductible against company profits. That is the real advantage of a corporate structure, and it is the reason gearing changes the answer — see incorporating a portfolio.
Extraction
Dividend rates rose on 6 April 2026. The ordinary rate went from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate is unchanged at 39.35%, and the dividend allowance remains £500.
Illustrative only, assuming no associated companies and a shareholder already taxed at the higher rate on other income. The company makes £40,000 of profit after interest and costs. Corporation tax at 19% is £7,600, leaving £32,400. The whole of that is paid out as a dividend. After the £500 allowance, £31,900 is taxed at 35.75%, which is £11,404.
| Route | Total tax on £40,000 of profit |
|---|---|
| Profit retained in the company | £7,600 (19%) |
| Profit fully extracted as a dividend | £19,004 (about 47.5%) |
That gap is the whole company question in one table. Retained profit is taxed once. Extracted profit is taxed twice, and the second layer got two points worse in April 2026. A structure built to shelter mortgage interest works; the same structure used as a current account does not.
Every pound leaving a property company is one of four things: salary, a dividend, repayment of money you lent the company, or a loan from the company to you. The directors' loan account records the last two, and it is the record most often rebuilt at the year end instead of kept.
Both directions matter. An overdrawn account at the year end is a tax event for the company and a reportable question for the director. And the deposit a landlord put in to buy the first property is usually a genuine loan that can be repaid without any tax at all — but only where somebody wrote it down at the time, with the date and the amount. A reconstructed loan account is an argument; a maintained one is a fact.
ATED
The Annual Tax on Enveloped Dwellings is payable mainly by companies owning UK residential property valued over £500,000. It also catches partnerships with a corporate partner and collective investment schemes, which is the limb most often overlooked because the property is not held by a company at all.
Chargeable amounts for 1 April 2026 to 31 March 2027:
| Property value | Annual charge |
|---|---|
| £500,001 – £1m | £4,600 |
| £1m – £2m | £9,450 |
| £2m – £5m | £32,200 |
| £5m – £10m | £75,450 |
| £10m – £20m | £151,450 |
| Over £20m | £303,450 |
Values matter more than purchase prices here, and a company that bought a house for £430,000 several years ago may hold one worth more than £500,000 now. If a company or a corporate-partner partnership in your structure holds a dwelling anywhere near that line, ATED is a live question and it needs answering on the specific property rather than assumed away.
The forward look
From 6 April 2027 property income held personally is taxed at its own rates of 22%, 42% and 47% in England, Wales and Northern Ireland. The measure addresses individuals, partnerships, trusts and estates. Companies are not mentioned in it. A company's rental profits stay inside corporation tax at 19% to 25%.
So the gap between personal and corporate ownership widens from April 2027 — but only for the landlord who retains and reinvests. For the landlord who needs the income, the second layer still costs 10.75% or 35.75%, and April 2026 made it worse. Two changes pulling in opposite directions is exactly why this question has to be answered on figures rather than on a rule of thumb. The honest version is on incorporating a property portfolio, and the arithmetic runs in the incorporation calculator.
Company accounts prepared and filed at Companies House, with investment property, loans and director balances presented properly rather than plugged.
The CT600 and computations, with the associated companies position established so the divided limits are applied deliberately rather than discovered.
Salary, dividends and loan repayments modelled on the post-April 2026 rates, so the money comes out the least expensive way that fits what you actually need.
Maintained through the year with dates and amounts, so money you lent in can be repaid, and nothing goes overdrawn by accident at the year end.
Every dwelling in the structure checked against the £500,000 threshold and the 2026/27 bands, including partnerships with a corporate partner.
Whether the number of companies still earns its keep, given what the divided limits cost and what a change would cost to make.
Property companies & SPVs19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between the two, on rates that have applied since 1 April 2023. The limits are not per company in the way most landlords assume. They are divided by the number of associated companies plus the company itself, and reduced for accounting periods shorter than twelve months. A landlord with three other associated companies is one of four, so the limits become £12,500 and £62,500 — and a company with £40,000 of profit that expected 19% throughout is instead in marginal relief. It is the most expensive thing about running a property per company without planning it.
No. HMRC's Property Income Manual states that companies carrying on a property business are not affected by the finance cost restriction, so mortgage interest is fully deductible against company profits. That is the genuine advantage of a corporate structure and it is worth stating plainly. It is also only half the picture, because the money then has to come out. Corporation tax at 19% to 25% is followed by dividend tax on extraction, and the dividend rates rose on 6 April 2026 to 10.75% ordinary and 35.75% upper, with the additional rate at 39.35% and the dividend allowance at £500. Full interest relief matters most where profit stays in the company.
Two layers, and the second got more expensive on 6 April 2026. The company pays corporation tax on its profit first. What is left can be paid as a dividend, and the dividend rates are now 10.75% at the ordinary rate and 35.75% at the upper rate, with the additional rate unchanged at 39.35% and the dividend allowance still £500. Illustratively, £40,000 of company profit taxed at 19% leaves £32,400; paying all of it to a higher-rate shareholder costs 35.75% on £31,900 after the allowance, or £11,404. Total tax is about £19,004 on £40,000, against £7,600 if the profit stays in the company.
The Annual Tax on Enveloped Dwellings is payable mainly by companies owning UK residential property valued at more than £500,000, and it also catches partnerships with a corporate partner and collective investment schemes. The chargeable amounts for 1 April 2026 to 31 March 2027 are £4,600 for a property valued between £500,000 and £1 million, £9,450 between £1 million and £2 million, £32,200 between £2 million and £5 million, £75,450 between £5 million and £10 million, £151,450 between £10 million and £20 million, and £303,450 above £20 million. It is an annual charge and it is easy to miss, because nothing in the ordinary accounts cycle prompts it.
The measure introducing separate property income rates of 22%, 42% and 47% from 6 April 2027 addresses individuals, partnerships, trusts and estates. Companies are not mentioned in it. A company's rental profits continue to be charged to corporation tax at 19% to 25% with marginal relief between. The practical effect is that from April 2027 the gap between holding property personally and holding it in a company widens for a landlord who retains and reinvests profit, and narrows for one who needs the income personally, because extraction still costs 10.75% or 35.75% on top. It moves the arithmetic; it does not settle it.
Every pound that leaves a property company is one of four things: salary, a dividend, repayment of money you lent the company, or a loan from the company to you. The directors' loan account is the record of the last two, and it is the one most often reconstructed at the year end rather than kept as it goes. That matters in both directions. An overdrawn balance at the year end is a tax event for the company and a reportable question for the director. And the deposit a landlord put in to buy the first property is usually a genuine loan that can be repaid without tax — but only if somebody recorded it at the time.
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