🔹 Introduction
If you’re a UK contractor, property developer, or investor looking to manage risk and optimise your tax position, you’ve likely heard of an SPV—a Special Purpose Vehicle.
SPVs have become an essential tool in construction, used to isolate project risk, improve tax efficiency, and attract financing. This blog breaks down what an SPV is, why it’s used in construction, and how to set one up the right way.
🔹 What is an SPV?
A Special Purpose Vehicle (SPV) is a limited company set up for a specific project—usually a property development or construction job. It acts as a separate legal entity to:
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Ring-fence liabilities
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Segregate project finances
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Attract third-party investors
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Simplify profit distribution
You can think of an SPV as a “container” for a single job, keeping it separate from your core business.
🔹 Why Use an SPV in Construction?
| Benefit | Explanation |
|---|---|
| Risk Isolation | Limits liability to that project; protects your main business and other assets |
| Tax Efficiency | Enables targeted tax planning and dividend extraction |
| Investor Clarity | Makes it easier for investors to track ROI on a single project |
| Finance-Friendly | Banks and lenders prefer funding project-specific entities |
| Exit Strategy Simplicity | Easier to sell a completed project via SPV sale |
đź’ˇ Example: A developer builds 12 flats under an SPV. Once complete, they sell the company (and the flats) to a buyer, avoiding SDLT on the property sale.
🔹 When Should Contractors Consider an SPV?
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For large projects with external investors or lenders
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When working with joint venture partners
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If operating multiple developments simultaneously
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To legally separate residential from commercial jobs
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For SPV-to-SPV group structures (advanced tax strategy)
🔹 How to Set Up an SPV in the UK
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Register a Limited Company
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Use Companies House
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Choose a clear name tied to the project (e.g., “Kingswood Build Ltd”)
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Define Shareholders and Directors
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Who owns the SPV?
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Ensure contracts are clear on ownership and profit split
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Open a Business Bank Account
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Keep all SPV finances separate
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Register for VAT & CIS (if applicable)
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Especially if supplying construction services or buying materials
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Set Up Accounting Systems
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Use cloud accounting (e.g., Xero, QuickBooks) for real-time tracking
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🔹 Tax Implications of SPVs
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Corporation Tax applies to SPV profits
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No VAT registration needed if the SPV is solely holding property, but required if trading/building
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You may qualify for:
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Capital Allowances
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Group relief (if part of a group structure)
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Business Asset Disposal relief if selling the SPV
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Always consult a tax specialist before transferring assets in/out of SPVs.
🔹 Common Mistakes When Using SPVs
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Failing to treat the SPV as a separate entity
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Mixing SPV and parent company finances
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Poorly structured shareholder agreements
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Not planning the exit in advance
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Ignoring SPV accounting deadlines and VAT responsibilities
🔹 FAQs
Can I use one SPV for multiple projects?
It’s possible, but it defeats the main purpose. Use one SPV per project for risk and clarity.
Are SPVs only for developers?
No—contractors, investors, and even architects use SPVs to manage risk, structure joint ventures, or hold assets.
Do SPVs help with CIS?
Yes—SPVs can be registered for CIS, and you can ring-fence compliance within one project entity.
🔚 Final Thoughts
SPVs aren’t just for big developers—they’re a smart tool for contractors who want to scale, protect themselves legally, or optimise tax planning. Set up correctly, they offer both flexibility and professionalism.
Thinking of launching your next project through an SPV? Get in touch with our specialist SPV accountants today for a seamless setup and tax strategy.