Business insolvencies fall by 1.7%

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England and Wales fell by 1.7% in August 2025 to a total of 2,048 compared to July 2025’s total of 2,083, and increased by 5.9% compared to August 2024’s figure of 1,933.

The insolvencies consisted of 281 compulsory liquidations, 1,578 creditors’ voluntary liquidations (CVLs), 124 administrations and 17 company voluntary arrangements (CVAs). There were no receivership appointments.

CVLs accounted for 79% of all company insolvencies. The number of CVLs was similar to both August 2025 and the same month last year (September 2024).

The number of compulsory liquidations was 9% lower than in August 2025, but 17% higher than in September 2024 and 4% higher than the 2024 monthly average.

The number of administrations was 2% higher than in August 2025 but 17% lower than in September 2024. The average monthly number of administrations so far in 2025 is slightly lower than the 2024 monthly average.

The number of CVAs was 6% higher than in August 2025 and the same as in September 2024. Numbers remain low compared to historical levels. CVAs are not seasonally adjusted due to low volumes.

Commenting on the publication of the September 2025 monthly insolvency statistics for England and Wales, Tom Russell, President of R3, the UK’s restructuring, turnaround and insolvency trade body, said “Corporate insolvencies have decreased slightly in September 2025 compared to August and have increased by 2% on the same month last year.  However, overall, insolvency activity remains high, with a sense of ‘stable stress’ continuing across businesses and households alike.

“With the November budget around the corner, many business leaders are nervous about what lies ahead and are putting off making major recruitment or investment decisions. They will be hoping that the Chancellor introduces confidence-building measures that encourage investment, recruitment and expansion rather than further increasing the tax burden which could worsen cashflow problems for businesses which might already be struggling.

“Ongoing challenges such as higher energy and materials costs, cautious consumer demand and creditor pressure have combined with slower than anticipated reductions in the cost of borrowing to leave some businesses fighting hard to stay afloat.

“This pressure is reflected in the latest Office for National Statistics business insights data, which revealed that around one in six (17%) trading businesses reported having no cash reserves in late September 2025 – the highest proportion since the question was introduced in June 2020.

“This is deeply concerning, as a lack of cash reserves leaves businesses particularly vulnerable to even small financial shocks, such as a bad debt or loss of a customer, challenges which they might previously have been able to weather. It suggests insolvency activity is likely to remain at the current level for some time.

“Sector-specific pressures are also evident. The hospitality sector continues to face difficulties, with the hotel sector being a case in point.  Whilst specialist spa or wedding venues remain busy, for independent and regional hotels the higher staff, maintenance and food costs are impacting margins.

“While many hospitality businesses have managed through the summer months and are looking ahead to the festive season, they will need to plan carefully for the traditionally quieter months of January and February. Supportive measures in the November budget, such as positive transformation of business rates, would be particularly welcome.

“The latest wage growth and unemployment figures suggest the labour market has stabilised. However, young people, who are often employed in hospitality firms, have been disproportionately affected with higher rates of unemployment.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies, said “Budget uncertainties, rumours of tax and price hikes, and inflation set to be the highest among the G7 club, all point towards a landslide of slow to no growth. Creditors’ Voluntary Liquidations (CVLs) comprise an alarming 79% of all insolvencies, suggesting that UK businesses are running out of options to protect margins and plan ahead.

“With the Bank’s base rate review in early November, many are holding their breath for an economic kickstart. If interest rates are unlikely to budge, and prices continue climbing, all eyes will turn to the delayed Budget for the nation to secure renewed certainty and stability, and a way forward.

“As ever, our message to businesses is clear: act early if you anticipate financial trouble. Doing so ensures that more options are available for you to secure a profitable future and remain trading.”

Matthew Richards, Joint Head of Restructuring and Insolvency at international accountancy and business advisory group Azets, said  “Liquidations have driven the year-on-year increase in corporate insolvencies as a greater number of businesses face enforced or chosen closure and fewer are in a position to be rescued than they were 12 months ago. Compulsory Liquidations and Creditors’ Voluntary Liquidations are higher than they were in September 2024 and Administration numbers have fallen since this time last year.  

“Without question, costs continue to be the biggest driver of corporate insolvencies. Businesses have had almost five years of dealing with rising expenses, COVID-driven debt, uncontrollable inflation and a series of economic and geopolitical issues – all of which have hit margins, clients’ willingness to spend, and access to finance. 

“On top of this, creditor pressure has increased as businesses in the private sector follow HMRC’s assertive stance on chasing down debts and issuing winding-up petitions. While HMRC’s approach is rooted in a desire to recover money for the Treasury, private sector creditors are driven by a battle to balance their own books and meet their own payment commitments in the turbulent business climate.

“While our SME clients remain resilient due to their directors’ closeness to the coalface and willingness and ability to act quickly, we’re seeing and hearing reports of a number of fundamentally sound businesses seeking support or entering insolvency processes. Many of these businesses wouldn’t have been in this position before the pandemic, and this shows the toll the last five years has taken on firms across the UK. 

“Given the ongoing issues faced by the business community – issues which can’t and won’t be resolved overnight – and the increase in operating costs associated with the winter months, it’s likely that insolvency numbers will rise in the run-up to Christmas. 

“Looking at the market more widely, worries about expenses and the health of the economy remain front of mind for many directors. There’s no denying that the changes to Employer National Insurance have increased costs for businesses and these have all had a negative effect on profits, pay, and growth, and, in many cases, have led to firms increasing their prices as they finally ran out of road after years of absorbing costs.  

“Businesses are also worried about the economy and the ongoing impact of tax burdens on their ability to break even. With the Budget very much on the horizon, firms up and down the country are praying that the Chancellor won’t introduce measures that will increase costs even further. If she does, it’s likely corporate insolvencies will rise further.”