Business insolvencies increase by 2.9%

Latest figures from the Insolvency Service have shown that the number of registered business insolvencies in England and Wales increased by 2.9% in April 2025 to a total of 2,053 compared to March 2025’s total of 1,996, and decreased by 5.1% compared to April 2024’s total of 2,163.

The business insolvencies consisted of 379 compulsory liquidations, 1,544 creditors’ voluntary liquidations (CVLs), 105 administrations, 24 company voluntary arrangements (CVAs) and one receivership appointment.

In April 2025, CVLs accounted for 75% of all company insolvencies. The number of CVLs was similar to that in March 2025, but was 10% lower than the same month last year (April 2024). 

Compulsory liquidations have increased in recent months. April 2025 saw the highest monthly number since September 2014, 24% higher than in March 2025 and 33% higher than in April 2024.

The number of administrations in April 2025 was 20% lower than in March 2025 and 30% lower than in April 2024. The number of CVAs in April 2025 was 41% higher than in March 2025 and 33% higher than in April 2024.

Tom Russell, President of R3, the UK’s insolvency and restructuring trade body, and a Licensed Insolvency Practitioner and Director at James Cowper Kreston said “April’s corporate insolvency figures were the highest we have seen since July 2024. Creditors’ Voluntary Liquidations remain the process companies most commonly enter into – and their consistently high numbers reflect the ongoing challenges, high costs and political and economic uncertainty businesses face – and the toll these are taking on their finances and their confidence in their ability to turn their situation around. Compulsory liquidations have also hit their highest level in more than five years as creditors chase down unpaid debts in an attempt to meet their own payment deadlines – led by the HMRC as the Government attempts to balance the national books.

“Increasing costs and uncertainty are continuing to drive corporate insolvencies. April saw the introduction of the new rates for Employers’ National Insurance Contributions and Minimum Wage, which have increased overheads for businesses at an already challenging time. Many businesses will already have increased prices and cut expenditure to cope with the existing economic challenges and many, especially SMEs, will find it increasingly difficult to respond to further cost increases.

“It is unlikely that we will see the full impact this will have on businesses until later in the year, but the prospect of these changes being introduced has influenced a number of directors’ decisions to seek insolvency and restructuring advice and consider the future of their businesses. The recent increase in unemployment indicates that the tax increases, along with the prospect of the Employment Rights Bill coming into law, has also affected hiring levels and investment as management teams wait to see how it will affect their wage bills, and we expect this to continue until the picture is clearer.

“Alongside this, businesses have faced the impact of the introduction of the US tariffs. While some of the outcomes from the President and Prime Minister’s recent announcement will be a relief to businesses in a range of sectors, a number of the details of the tariffs still need to be confirmed, and there is no denying their introduction will make it more expensive to export to America. The uncertainty and unpredictability around US tariff policy generally is also likely to affect costs, growth and investment as both business owners and lenders will look at how the tariffs will affect revenue and profits and may choose to change their plans, or review or withdraw their funding once these have been considered.

“Looking across the economy, the sectoral picture is a mixed one. Construction continues to be affected by ongoing issues with the price of materials, payment and client hesitancy about commissioning new work, while the care sector is trying navigate how it will manage the Government’s proposals to end overseas recruitment for social care visas. On a more positive note, retailers have benefited from the late Easter and improved weather, which has led to an increase in sales, and hospitality has also seen a rise in activity and spending levels. However, there is no escaping the fact that all of these sectors will be seriously affected by the changes to National Insurance and Minimum Wage, which will put a further squeeze on margins and increase costs, and could lead to more businesses becoming financially distressed.”

Giuseppe Parla, Business Recovery Director at Menzies, said“An uptick in corporate insolvencies is a clear sign that many UK businesses are still walking a financial tightrope. April brought a series of tax changes that may have disrupted cash flow for smaller firms already grappling with rising input costs and soft consumer demand. This may have tipped the balance for already-vulnerable businesses.

“On top of that, renewed global uncertainty – including the threat posed by US tariffs on trade partners across the world – is making forward planning even harder for manufacturers and exporters. Until there is greater stability across tax, trade and interest rate policy, we expect further volatility in insolvency trends – especially in sectors where margins remain tight and confidence is low.

“While the recent reduction in the Bank of England’s base rate – and the expectation of further cuts later in 2025 – may well bring insolvency numbers down further, as more businesses look to secure cheaper funding, it may be an act too little and too late.”