Property SPV payroll comes down to two questions: whether the company needs a PAYE scheme at all, and what salary the director should take. Many single-property SPVs never need to set up payroll, because a director who draws only dividends is not being paid employment income and there is nothing to report. But once the company pays a director’s salary, employs a property manager, or engages cleaners for a serviced let, PAYE registration becomes compulsory, and the deadlines start running.
The salary question is where the money is. For 2026/27, employer National Insurance is 15% on earnings above a £5,000 secondary threshold, the Employment Allowance is unavailable to most single-director SPVs, and dividend tax rates rose by two percentage points on 6 April 2026. Those three changes together mean the standard advice you will find in older articles now gives the wrong answer for a large group of landlords. This guide covers registration, the salary decision with figures, what happens across multiple SPVs, and the ongoing filing obligations of limited company payroll.
Key Takeaways
A property SPV only needs a PAYE scheme if it pays employment income; a director taking dividends alone does not require payroll
Directors are office holders, so their earnings are employment income under ITEPA 2003 s.5 and must go through PAYE once a salary is paid
- Employer National Insurance for 2026/27 is 15% on earnings above the £5,000 secondary threshold, with no upper limit
The Employment Allowance of £10,500 cannot be claimed where the only employee paid above the secondary threshold is a director, which excludes most single-director SPVs
A director’s salary is deductible against property business profits only to the extent it reflects genuine work, per HMRC CTM08330 and CTM08440
Where the director’s personal allowance is unused, a £12,570 salary beats a £5,000 salary by roughly £463 a year at the 19% corporation tax rate, once all profits are paid out
Where the personal allowance is already used by other income, a £5,000 salary plus dividends is the better route
Landlords running several SPVs face two traps: the Employment Allowance connected-companies rule, and the aggregation of earnings between employers carried on in association
Accrued but unpaid directors’ remuneration is only deductible if paid within nine months of the period end, under CTA 2009 s.1249
Does Your Property SPV Need a Payroll at All?
No, not automatically. A limited company only needs a PAYE scheme if it pays someone employment income. A single-property SPV where the director takes dividends, reimburses genuine expenses, and pays nothing else does not need to register.
That is a common and legitimate position. It is also, for many landlords, the wrong one, because it leaves the personal allowance unused and forgoes a corporation tax deduction. The point is that deciding whether to set up payroll is a choice for most SPVs, not an automatic consequence of incorporating.
You will need to set up payroll where the SPV:
- Pays a director’s salary or fees
- Employs a property manager, site manager, or administrator
- Employs cleaners, housekeepers or maintenance staff, which is common for serviced accommodation and HMOs
- Pays a family member for work in the business
- Provides taxable benefits in kind to a director or employee
Key fact:
Reimbursing a director for a genuine business cost they paid personally, such as mileage to a property or a Land Registry search fee, is not employment income and does not on its own create a payroll obligation. Drawing money that is not a salary, a dividend, or a reimbursed expense creates a loan to a participator instead, and the close company charge under CTA 2010 s.455 applies at 35.75% for loans made on or after 6 April 2026.When Must You Register as an Employer?
You must register with HMRC as an employer before the first payday if any of the following apply to anyone the SPV pays:
- They earn at or above the National Insurance Lower Earnings Limit
- They already have another job
- They receive a state, company or occupational pension
- They receive expenses or benefits in kind
The second and third points catch out more SPVs than the first. A director who runs the property company alongside a full-time job, or who has started drawing a pension, triggers registration even on a very small salary, because their tax code has to be operated correctly against a second source of income.
Key fact:
You cannot register a PAYE scheme more than two months before the first payday, and it can take up to 15 working days to receive the employer PAYE reference and Accounts Office reference. Register early enough to file the first Full Payment Submission on time, but not so early that HMRC rejects it.How Do You Set Up PAYE for a Property SPV?
Decide the salary before you register
The salary level determines whether employer NIC arises, whether the year counts for state pension purposes, and whether the deduction survives HMRC scrutiny. Working this out afterwards means amending the first payroll run.
Register as an employer with HMRC
Register online through the company's Government Gateway. You will need the company number, registered office, the director's National Insurance number, and the intended first payday. HMRC issues an employer PAYE reference and an Accounts Office reference. This is the formal step that lets you set up payroll with HMRC directly.
Choose RTI-compatible payroll software
Any commercial payroll package will do. HMRC's Basic PAYE Tools is free and adequate for a company with fewer than 10 employees, which covers almost every SPV, though it will not produce payslips or handle auto-enrolment assessments.
Consider an annual PAYE scheme
Where the SPV pays a single director once a year, HMRC can register the scheme as annual. You then file one Full Payment Submission a year rather than twelve. For a dormant-ish SPV with one director and no other staff, this removes eleven filings and eleven chances of a late-filing penalty.
Document the director's employment terms
A board minute recording the salary, duties, and the basis for setting it supports the corporation tax deduction if HMRC asks. Note that giving the director a formal contract of employment brings the National Minimum Wage into play, which a £5,000 salary would breach. Office holders without a contract of employment are outside NMW
Deal with auto-enrolment
Assess whether the SPV has any duties; if not, notify The Pensions Regulator rather than ignoring the letter.
Run the first payroll and file the FPS on or before payday
Then set up the payment method for PAYE and NIC, due by the 22nd of the following month where paid electronically.
Is a Director's Salary Deductible in a Property SPV?
Only to the extent it is justified by the work actually done. This is the point at which property SPVs differ from trading companies, and it is where much casual advice goes wrong.
A company’s UK property business profits are computed using trading profit principles under CTA 2009 s.210, so the deduction depends on the cost being incurred wholly and exclusively for the property business. HMRC’s guidance at CTM08440 is explicit that where a company has both an investment business and a property business, the part of directors’ and employees’ remuneration that relates to managing the properties is deducted when computing the property business profits, rather than as an expense of management under CTA 2009 s.1219.
CTM08330 sets out the reasonableness test and confirms that paying a director remuneration does not, by itself, make it deductible. The authority is L G Berry Investments Ltd v Attwooll (1961-64) 41 TC 547, where the Commissioners allowed only the portion of directors’ fees that was reasonably related to the duties actually performed, and the court upheld that approach. HMRC discusses the case at CTM08170. HMRC’s guidance on remuneration paid to directors and their close relatives is at BIM47105.
Key fact:
A modest salary reflecting real work- letting management, tenant liaison, arranging repairs, keeping the records- is straightforward. A £40,000 salary from an SPV holding one flat with a managing agent in place is not, and the excess risks disallowance.The Nine-Month Trap on Accrued Salary
CTA 2009 s.1249 restricts the deduction for employee and director remuneration that is charged in the accounts but not actually paid within nine months of the end of the period of account. The deduction is not lost; it moves to the period in which payment is made.
This catches SPVs constantly. A £12,570 salary is accrued in the accounts to improve the tax position; the company never physically pays it because it is short of cash, and the deduction is deferred to a later year while the RTI filings say it was paid on time.
Practical Lesson
Do not accrue a salary unless you intend to pay it. Real Time Information means HMRC receives a submission every time the SPV runs payroll. If the RTI says £12,570 was paid on 31 March but the cash never moved from the company’s account, that mismatch is visible to HMRC.What Salary Should a Property SPV Director Take in 2026/27?
The answer depends on one thing more than any other: whether the director’s personal allowance is already used by other income. Most portfolio landlords have personal rental income, a salary elsewhere, or a pension, so their answer differs from the standard advice.
Worked Example: Single-Director SPV, £40,000 Annual Property Profit
Assume an SPV with one director and no other employees. Corporation tax applies at the 19% small profits rate. The Employment Allowance is not available because the only employee paid above the secondary threshold is a director.
Establish the three candidate salary levels
- £5,000, which is exactly the secondary threshold, so no employer NIC arises
- £6,708, the Lower Earnings Limit, the minimum needed for the year to count towards the State Pension
- £12,570, the personal allowance and the primary threshold, so no income tax and no employee NIC
Calculate the employer NIC at each level
| Salary | Calculation | Employer NIC |
|---|---|---|
| £5,000 | Nil (no earnings above secondary threshold) | £0.00 |
| £6,708 | (£6,708 − £5,000) × 15% | £256.20 |
| £12,570 | (£12,570 − £5,000) × 15% | £1,135.50 |
Compare the total outcome at each salary level
The extra cost to the company of moving from £5,000 to £12,570 is the additional salary plus the employer NIC: £7,570 + £1,135.50 = £8,705.50
That whole amount is deductible, so no corporation tax is paid on it. The director receives £7,570 with no income tax and no employee NIC.
If the same £8,705.50 of profit were left in the company and paid as a dividend instead:
- Corporation tax at 19%: £8,705.50 × 19% = £1,654.05
- Dividend available: £8,705.50 − £1,654.05 = £7,051.45
- Dividend tax at 10.75%: £7,051.45 × 10.75% = £757.98
- Net to the director: £7,051.45 − £757.98 = £6,293.47
Compare the outcomes
| Salary route | Dividend route | |
|---|---|---|
| Cost to the company | £8,705.50 | £8,705.50 |
| Corporation tax paid | Nil | £1,654.05 |
| Employer NIC | £1,135.50 | Nil |
| Income tax and employee NIC | Nil | Nil |
| Salary route | Dividend route | |
|---|---|---|
| Dividend tax at 10.75% | Nil | £757.98 |
| Net to the director | £7,570.00 | £6,293.47 |
The salary route is £1,276.53 better, because the £7,570 passes to the director entirely free of tax and NIC while still attracting corporation tax relief.
Now Change One Fact
Assume the same director already has £30,000 of personal rental income, so the personal allowance is fully used, and the basic rate band is partly used.
The additional £7,570 in salary is taxed at 20%, resulting in £1,514 in income tax. Employee NIC remains nil, because National Insurance is assessed on this employment separately and £12,570 does not exceed the primary threshold.
| Salary route | Dividend route | |
|---|---|---|
| Net to the director | £6,056.00 | £6,293.47 |
The answer reverses. With the personal allowance used up, the dividend route is £237.47 better, and the sensible salary is £5,000.
| Director's position | Recommended salary | Reason |
|---|---|---|
| No other income, personal allowance free | £12,570 | Salary is tax-free in the director's hands and deductible for the company |
| Other income uses part of the personal allowance | Salary up to the unused allowance | Take the tax-free portion, then dividends |
| Personal allowance fully used | £5,000 | Avoids employer NIC entirely; dividends are cheaper at the margin |
| Needs a State Pension qualifying year and has other income | £6,708 | £256.20 of employer NIC buys a qualifying year |
What Happens If You Run Several SPVs?
This is where property structures diverge from ordinary small companies, and where two rules bite that most payroll guidance never mentions.
The Employment Allowance Connected-Companies Rule
Where two or more companies are connected under the rules in the National Insurance Contributions Act 2014, only one of them can claim the Employment Allowance, and they must choose which. A landlord with five SPVs under common control does not get five allowances of £10,500.
For most single-director SPVs this is academic, because the single-director exclusion already denies the allowance. It becomes live as soon as one company in the group employs someone who is not a director, for example a property manager across the portfolio.
The Aggregation of Earnings Rule
Where a person holds employments with two or more employers and those employers are carried on in association with each other, the earnings from those employments must be aggregated for National Insurance purposes.
The practical effect is that a director paid £5,000 by each of three SPVs under common control cannot assume three separate £5,000 secondary thresholds. Aggregated earnings of £15,000 against a single £5,000 threshold produce employer NIC of £1,500 rather than nil.
| Assumption | Three SPVs, £5,000 salary each | If aggregation applies |
|---|---|---|
| Total salary | £15,000 | £15,000 |
| Secondary thresholds available | £15,000 | £5,000 |
| Employer NIC at 15% | Nil | £1,500 |
Note
Whether employers are “carried on in association” is a question of fact rather than a simple test of common ownership, and it turns on matters such as shared premises, staff, management and administration. Common ownership of several SPVs run from one office with one bookkeeper is a much stronger case for association than genuinely separate ventures. This point should be reviewed on the specific facts before any multi-SPV payroll is set up.
Another consequence is worth noting. Associated companies also divide the corporation tax small profits limit of £50,000 and the upper limit of £250,000 between them. Hence, a landlord with five SPVs reaches marginal relief far sooner than the single-company figures in the worked example above suggest.
Can You Put Your Spouse or Children on the SPV Payroll?
Yes, provided the arrangement is real. The test is the same as for the director’s own salary: is the payment commensurate with the work actually done for the property business?
The leading authority on excessive family remuneration is Copeman v William Flood & Sons Ltd (1940) 24 TC 53, where remuneration paid to the proprietor’s children was held to be partly disallowable because it exceeded any commercial value of the services rendered. HMRC’s approach to remuneration paid to directors and their close relatives is set out at BIM47105, and it looks for the same evidence a tribunal would: what the person does, how long it takes, and what an unconnected person would have been paid for it.
Three practical points
- Keep evidence – A short job description, a record of hours worked, and payment actually made to the family member’s bank account. Money paid into the director’s account is not a salary.
- National Minimum Wage applies to an employed spouse – The family worker exemption is narrow and generally will not help where the employer is a company. Paying a spouse £5,000 for what is plainly 20 hours a week is an NMW problem as well as a tax one.
- Do not confuse this with share planning – Giving a spouse shares and paying dividends are different routes with different rules, and they do not require any work to be done. Paying a salary requires work; paying a dividend requires shares.
Do Auto-Enrolment Rules Apply to a Single-Director SPV?
Usually not. A company with a sole director and no other staff has no automatic enrolment duties, because a director without a contract of employment is not a worker for these purposes. The same applies where the only people the company pays are directors, and none of them has an employment contract.
Duties do apply where the SPV has at least one worker other than a single contract-free director. That includes:
- A director with a contract of employment where there is at least one other such person
- A property manager, administrator, cleaner or housekeeper on the payroll
For 2026/27, the auto-enrolment thresholds are unchanged: the earnings trigger is £10,000, and the qualifying earnings band runs from £6,240 to £50,270.
Key fact:
Even where the SPV has no duties, it must tell The Pensions Regulator. Ignoring the letter that arrives after PAYE registration is a common and entirely avoidable source of penalties. Where duties do apply, a declaration of compliance is required within five months of the duties start date.
What About Furnished Holiday Lets?
The furnished holiday lettings (FHL) regime was abolished by the Finance Act 2025, with effect from 1 April 2025 for companies (6 April 2025 for individuals). Holiday lets held by a property SPV are now part of its ordinary UK property business and are taxed in the same way as its long-term lets.
For payroll, very little changes. Salary, PAYE and NIC work exactly as described above. A director’s salary for managing holiday lets is deductible against property business profits on the same tests: wholly and exclusively for the business, and reasonable for the work done.
What has changed is capital allowances. Since April 2025, no new plant and machinery allowances are available for furniture and equipment in former FHLs. Transitional rules let existing pools continue to be written down, and replacement of domestic items relief now applies to replacement furnishings.
Serviced accommodation that comes with substantial services, well beyond a normal let, may still be a trade on its facts. That is a separate question from the old FHL rules and should be reviewed with an adviser.
Construction Industry Scheme (CIS) Considerations
- Send monthly returns to HMRC, even if you are already submitting RTI reports.
- Apply special withholding rules to payments made to sub-contractors, usually with a 20% deduction.
- Treat NIC and tax for CIS income separately from other income.
- Face penalties for late monthly returns: £100 as soon as a return is late, £200 at two months, then the greater of £300 or 5% of the CIS deductions at six months and again at 12 months. For returns more than 12 months late, a further penalty of up to £3,000 or 100% of the deductions on the return (whichever is higher) can apply.
Where it affects SPV payroll:
If you hire a contractor (not an employee) for renovation work and your SPV is registered for CIS, you must apply CIS withholding. This is different from the normal PAYE limited company payroll route used for the director’s own salary.
Example:
Suppose an SPV owns a large residential block and carries out major refurbishment costing more than £3 million. The SPV now counts as a CIS contractor. You must make CIS deductions from payments to any sub-contractors. The director’s salary, which is separate from the building work, should still be paid through the usual PAYE process.
Key fact:
CIS is often overlooked and can lead to serious compliance issues. If your renovation or maintenance costs are getting close to £3 million, speak to an accountant to check your CIS status before you reach the threshold. CIS returns must be filed every month. Late returns attract automatic penalties, and if the SPV fails to make deductions it can be made liable for the tax it should have withheld.
What If the SPV’s Director Lives Abroad?
If a director lives outside the UK, this alone does not make the SPV a non-resident landlord. The Non-Resident Landlord (NRL) scheme considers the landlord to be the company, not the director.
A company set up in the UK is considered UK resident for corporation tax under CTA 2009 s.14. The NRL scheme applies to landlords whose usual place of abode is outside the UK. For companies, HMRC looks at whether the main office or place of business is outside the UK. Whether the scheme applies to a specific SPV depends on the facts, so always check before making assumptions.
If the scheme applies, tax is withheld rather than handled through payroll. Letting agents take basic-rate tax from the rent after paying any allowable expenses, then send it to HMRC every quarter. If there is no agent, tenants who pay more than £100 a week must do this instead. The company can ask HMRC to receive rent without tax deducted if its UK tax affairs are up to date. This does not affect the SPV’s PAYE status.
The change is the director’s personal position:
- Salary: Directors’ fees from a UK company are generally taxable in the UK, both under UK law and under the directors’ fees article of most double tax treaties. PAYE still applies, but check the relevant treaty.
- Personal allowance: A non-resident only gets the UK personal allowance if they qualify under ITA 2007 s.56, for example as a UK or EEA national. Without it, a £12,570 salary is taxed at 20% from the first pound, and the salary comparison above no longer holds.
- Dividends: A non-resident’s UK tax on dividends may be limited under ITA 2007 s.811. The dividends may still be taxable in the director’s country of residence.
- National Insurance: Liability depends on where the director works and on any social security agreement between the UK and their country of residence.
What to do:
If the director is non-resident, take specialist advice before setting up the payroll scheme. The right salary may be different from the figures above, and in some cases nil.
What Are the Ongoing Payroll Deadlines?
Once you set up payroll, these are the recurring deadlines to track.
| Obligation | Deadline |
|---|---|
| Full Payment Submission (FPS) | On or before each payday |
| Employer Payment Summary (EPS), where needed | By the 19th of the following month |
| Pay PAYE and NIC electronically. | By the 22nd of the following month, or quarterly if average monthly liability is under £1,500 |
| Final FPS or EPS for the tax year | By 19 April following the tax year end |
| P60 to each employee | By 31 May |
| P11D and P11D(b) for benefits | By 6 July |
| Class 1A NIC on benefits | By 22 July |
Late FPS filing attracts a penalty of £100 a month for a scheme with one to nine employees. For an SPV filing twelve times a year for a single director, that is twelve opportunities to be late, which is the main argument for the annual scheme in Step 4 above.
Common Mistakes When You Set Up Payroll for a Property SPV
- Accruing a salary that is never paid. CTA 2009 s.1249 defers the deduction until payment is made. An accrual in the accounts with no cash movement and no RTI submission is worse than no salary at all.
- Assuming the Employment Allowance is available. It is not, where the only employee paid above the secondary threshold is a director. Claiming it in payroll software and having it refused mid-year creates an underpayment.
- Setting the salary without checking the director’s other income. This single fact reverses the answer. A landlord with personal rental income should usually be on £5,000, not £12,570.
- Duplicating the secondary threshold across SPVs: Where the companies are carried on in association, earnings are aggregated, and only one threshold applies.
- Giving the director a contract of employment unnecessarily. It brings the National Minimum Wage into scope, which a small salary will breach, and it can also bring auto-enrolment duties into scope.
- Paying a family member into the director’s own bank account. If the money never reaches the family member, it is not their salary, and the deduction fails on the facts.
- Forgetting the Pensions Regulator. A nil-duties SPV still has to declare it.
- Missing the CIS angle entirely. A property investor spending more than £3m on construction operations in a rolling 12-month period becomes a deemed contractor under the Construction Industry Scheme. That is a separate regime from PAYE, with its own monthly returns and penalties, and larger portfolio companies often cross the threshold.
Real Time Information means HMRC receives a submission every time the SPV runs payroll, showing who was paid, how much, and when. No annual reconciliation means a mismatch might go unnoticed; the data arrives as payments are made.
Three cross-checks follow from that. The salary reported through RTI is compared against the employment income on the director’s Self Assessment return. The deduction claimed in the CT600 is compared against the total reported through RTI for the period, which is where an accrued but unpaid salary becomes visible. And the payroll pattern that files nil submissions all year and then reports a single large March payment raises the question of whether the payment was actually made or booked.
HMRC also holds the Land Registry and Stamp Duty Land Tax records for the properties the SPV owns, as well as the property business profit reported in the accounts. An SPV holding one flat with a managing agent, reporting a £40,000 director’s salary against £45,000 of rent, does not need an inspection to look odd on its face.
What HMRC Already Knows About Your SPV Payroll
Real Time Information means HMRC receives a submission every time the SPV runs payroll, showing who was paid, how much, and when. There is no annual reconciliation in which a mismatch might go unnoticed; the data arrives as the payments are made.
Three cross-checks follow from that. The salary reported through RTI is compared against the employment income on the director’s Self Assessment return. The deduction claimed in the CT600 is compared against the total reported through RTI for the period, which is where an accrued but unpaid salary becomes visible. And the payroll pattern that files nil submissions all year and then reports a single large March payment raises the question of whether the payment was actually made or booked.
HMRC also holds the Land Registry and Stamp Duty Land Tax records for the properties the SPV owns, as well as the property business profit reported in the accounts. An SPV holding one flat with a managing agent, reporting a £40,000 director’s salary against £45,000 of rent, does not need an inspection to look odd on its face.
Conclusion
Setting up payroll for a property SPV is mainly a choice, not just a compliance task. If the director only takes dividends, there is no need to set up payroll. If a salary is paid, you must register for PAYE. The salary should reflect real work, following the rules in CTM08330, and it must be actually paid within nine months after the period ends to be deductible for that period.
The right salary depends on the director’s other income. If the personal allowance has not been used, paying £12,570 as salary is about £1,277 better per year than taking dividends at a 19% corporation tax rate. If the personal allowance is already used, a £5,000 salary is usually best, with the rest taken as dividends.
If you have several SPVs, connected-company and aggregation rules will affect the calculations, and associated-company limits can increase the corporation tax rate. Model these effects before you set up payroll for the first time, not after.
If you have Furnished Holiday Lets, are a non-resident, or have construction spending close to £3 million (CIS), you should get specialist advice. Each of these situations has extra rules that take priority over the standard guidance.
Need Help Setting Up Your Property SPV Payroll?
The salary that suits a single-property SPV is rarely the one that suits a five-company structure, and the answer changes with the director’s other income. We recommend that you consult experts and get specific advice tailored to your situation.
FAQs
Only if it pays employment income; a director taking dividends alone, with genuine expenses reimbursed, does not need to register. Registration becomes compulsory once you pay a salary, employ staff, or provide taxable benefits.
£12,570, where the director’s personal allowance is unused, because the salary is personally tax-free and deductible for the company.
£5,000 where the personal allowance is already used by other income, since that avoids employer NIC altogether.
Not where the only employee paid above the £5,000 secondary threshold is a director. Most single-director SPVs are excluded. The £10,500 allowance becomes available once the company employs someone who is not a director.
Yes, to the extent it reflects work genuinely done for the property business. HMRC CTM08440 requires you to deduct the property-related part of remuneration when computing property business profits, and CTM08330 limits it to a reasonable amount for the duties performed.
No, provided the director has no employment contract, and there are no other staff. You must still tell The Pensions Regulator that the company has no duties.
Each company needs its own PAYE scheme, because each is a separate employer. Where the companies are carried on in association, the director’s earnings from them are aggregated for National Insurance, so the secondary threshold is not multiplied.
Under CTA 2009 s.1249, the deduction is deferred to the period in which the remuneration is actually paid. It is not permanently lost, but it does not reduce the current year’s corporation tax.
Yes, provided the arrangement is real. The spouse must do genuine work, and the payment must be proportionate to the hours and duties. Payment into the director’s account (rather than the spouse’s own account) will fail on the facts. National Minimum Wage also applies.