Bridging finance for corporation tax

Timing your tax without slowing your deals

Corporation tax rarely arrives at a convenient moment. If you are transferring a property portfolio into a limited company or SPV, you may face immediate liabilities linked to Capital Gains Tax and Stamp Duty Land Tax, plus a corporation tax timing gap once the company structure is in place. For professional landlords and SME developers, the question is simple: how do you settle the bill and still complete on the deal you have lined up?

Short-term bridging finance is designed for that precise timing challenge. It can release funds in days or weeks, letting you complete before deadlines, lock in prices and restructure into a tax-efficient company without draining operating cash. The UK market has deepened significantly, with loan books around the £10bn mark and forecasts pointing higher, so lender appetite for specialist, tax-driven cases has grown. That means more product choice for time-sensitive transactions, from portfolio incorporations to EPC-driven refurbishments that unlock refinancing.

Bridging is not about long-term cost minimisation. It is about speed, certainty of completion and a clear exit. Lenders focus on the asset and a realistic route to repay - usually refinance onto a commercial mortgage or a sale once the restructure and works are complete. Where borrowing sits within a company that holds and manages property, interest may be deductible for corporation tax purposes if the loan funds the business, which improves the net cost compared with personal borrowing. Used properly, bridging turns a tax timing problem into a planned refinancing strategy.

The right bridge lets you act now and optimise later - complete the transaction, then refinance on your terms.

Who is this aimed at?

If you are a UK landlord moving assets into an SPV, a small developer balancing acquisition deadlines with tax bills, or an adviser helping clients navigate pre-budget changes, this is for you. It is also relevant if you run BRR strategies and need to fund EPC upgrades quickly to qualify for sharper refinancing terms. For accountants and brokers, the value lies in modelling the net benefit - comparing tax savings and strategic gains against short-term finance costs - and selecting lenders comfortable with SPV incorporations and asset-based underwriting.

Your possible routes

1. Bridge to fund corporation tax and SDLT timing, then refinance to a commercial mortgage.

2. Bridge to complete portfolio transfer into an SPV, then term debt once accounts are established.

3. Bridge for acquisition plus EPC upgrades, then refinance on improved valuation and rental cover.

4. Bridge to meet pre-budget deadlines, then refinance after rule changes settle.

5. Bridge to cover CGT on disposals while redeploying capital into new purchases.

Cost, impact, returns and risks

Can you qualify?

Eligibility is mainly about asset quality, equity and your exit strategy. Lenders will prioritise the property’s value, location and condition, together with a credible plan to refinance to a commercial mortgage or to sell within the term. If you are incorporating into an SPV, expect questions about the commercial rationale, evidence of tax and legal advice, and how the bridge proceeds will be used. Where the borrowing sits in a company that holds property, interest can often be deductible if the loan funds business activity, but you should confirm treatment with your accountant. Anti-avoidance rules apply and lenders will check that the transaction stands up commercially. Kandoo works with a panel of UK bridging lenders that understand SPV transfers, BRR strategies and EPC-linked works, helping you match LTV, term and pricing to the realities of your exit.

From enquiry to exit - step-by-step

1. Outline the property, company structure and required amount.

2. Define the exit - refinance or sale within a set term.

3. Gather valuations, tenancy data and tax or legal advice letters.

4. Secure an Agreement in Principle and instruct solicitors.

5. Lender completes due diligence and issues formal offer.

6. Funds are released - interest retained or serviced monthly.

7. Complete works or restructure and prepare refinance application.

8. Exit via term mortgage or sale and close the bridge.

Upsides and trade offs

Before you commit

Model the numbers conservatively. Compare the corporation tax and SDLT timing benefits, the ability to complete before a budget deadline and the value uplift from refurbishments against the full financing cost. Include interest, all fees, potential extension charges and the impact of a slower exit or a tighter refinance market. Obtain formal tax and legal advice to ensure the structure is robust under UK rules, especially for SPV transfers. Lenders will expect to see that advice as part of due diligence. Finally, plan your refinance early - assemble accounts, rental data and EPC evidence so you can move as soon as works complete.

Alternatives to weigh up

1. Delay or phase the transaction - accept timing risk but avoid bridging costs.

2. Merchant cash or unsecured business loan - faster, but usually smaller limits.

3. Equity injection or partner capital - dilutes ownership but reduces debt.

4. Secured term loan or remortgage - cheaper, but slower underwriting.

5. Asset sale to release cash - immediate liquidity but potential tax crystallisation.

Frequently asked questions

Q: Can a bridge cover corporation tax directly for an SPV?
A: Yes, where purpose and routing are clearly business-related and documented. Lenders and your advisers will ensure funds are applied appropriately.

Q: How quickly can I complete?
A: Simple cases can complete in days, with most in a few weeks. Speed depends on valuations, legal searches and how quickly information is provided.

Q: What LTV can I expect?
A: Up to around 75% is possible on suitable assets with a strong exit. Lower LTVs typically reduce cost and improve approval odds.

Q: Is interest tax-deductible?
A: For companies holding property, interest is often deductible if the borrowing funds the business. Always confirm with your accountant.

Q: What is a typical exit?
A: Refinance to a commercial mortgage after incorporation or after EPC improvements and stabilised rent. Alternatively, sell the asset and repay.

Q: Are bridging costs worth it in a high-rate environment?
A: Where timing secures price, preserves cashflow or captures tax advantages, the net benefit can still be positive. Rigorous modelling is essential.

How Kandoo helps

Kandoo connects UK borrowers with a competitive panel of bridging lenders who understand tax-driven cases, SPV incorporations and refurbishment-led exits. We guide you through documentation, help model costs versus benefits and keep the process moving so you can complete on time and refinance with confidence.

Important information

This content is for information only and does not constitute tax, legal or financial advice. Bridging loans are secured against property and may involve higher costs. Always seek professional advice and ensure affordability before proceeding.

Next step: speak with Kandoo to compare offers, timeframes and exits aligned to your SPV or refurbishment plan.