Business insolvencies increased by 0.2% in 2025

Latest data from the Insolvency Service for England & Wales has shown that business insolvencies increased by 0.2% in 2025 when compared to 2024, rising to 23,938 from 23,880

The 2025 insolvencies comprisied of 18,525 creditors’ voluntary liquidations (CVLs), 3,730 compulsory liquidations, 1,495 administrations, 186 company voluntary arrangements (CVAs) and two receivership appointments.

In 2025, CVLs were the most common company insolvency procedure (77%), followed by compulsory liquidations (16%), administrations (6%) and CVAs (1%), whilst receivership appointments made up less than 1% of cases. There were two receivership appointments made in 2025, one fewer than in 2024. Compulsory liquidations made up a greater proportion of insolvencies in 2025 than in 2024, both because the number of compulsory liquidations increased and the number of CVLs decreased. The proportion of cases made up by administrations, CVAs and receivership appointments has remained similar since 2021.

Wholesale, retail and hospitality traders accounted for 30% of all company insolvencies in the year to November 2025, with 7,145 businesses affected – highlighting that while pressures remain elevated on the UK high street, the latest data suggests some stabilisation as firms enter the New Year.

Turning to the monthly figures,  the data for December 2025 showed that there were 1,671 insolvencies, a fall of y 10% when compared to November 2025, when there were 1,850 insolvencies.

The insolvencies consisted of 245 compulsory liquidations, 1,305 creditors’ voluntary liquidations (CVLs), 106 administrations and 15 company voluntary arrangements (CVAs). There were no receivership appointments.

The number of compulsory liquidations was 34% lower than the 10-year high seen in April 2025, and was lower than both December 2024 and the 2025 monthly average. The number of CVLs in December 2025 was lower than both November 2025 and the 2025 monthly average, with December 2025 recording the lowest number of CVLs since August 2021. Administrations and CVAs were also lower than in November 2025.

CVLs accounted for 78% of all company insolvencies. The number of CVLs decreased by 10% from November 2025.  CVLs in December 2025 were at the lowest recorded levels since August 2021. The number of compulsory liquidations in December 2025 was 4% lower than in November 2025 and 21% lower than in December 2024.

The number of administrations in December 2025 was 21% lower than in November 2025 and 20% lower than in December 2024. Whilst the number of CVAs in December 2025 was 17% lower than in November 2025 and 12% lower than in December 2024. Numbers remain low compared to historical levels. CVAs are not seasonally adjusted due to low volumes. There were no receivership appointments in December 2025.

Tom Russell, R3 President, said “Corporate insolvencies in 2025 remain at historically high levels with nearly 24,000 businesses becoming insolvent. Difficult trading conditions, high overheads and the impact of the national insurance rise weighed heavily on businesses last year.

“Compulsory liquidation levels have increased to their highest annual number in thirteen years as creditors take firmer action to recover debts to manage pressures in their own businesses. While creditors’ voluntary liquidation numbers over the past four years are at their highest levels since records began in 1960.

“Although inflation has begun to ease and economic growth has picked up slightly, 2025 was a year in which many businesses were on fragile ground financially. The lasting effects of elevated costs, restricted access to finance and subdued customer demand continue to stretch cashflow, particularly for smaller and mid-sized firms. This ongoing strain is reflected in business confidence levels which, according to a survey from the Institute of Chartered Accountants in England and Wales, remain at a three-year low.

“Construction continued to be the most distressed sector last year with 3,950 companies entering insolvency which accounted for 17% of industries captured. Major housebuilders are also forecasting static growth and muted demand this year due to market uncertainty and rising building costs. Retail and hospitality also remained the second and third most distressed sectors.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies said “While it is encouraging to see insolvency rates decrease, we know that big name brands are struggling and the outlook for 2026 is far from rosy.

“Retailers and hospitality businesses who had hoped for more support from the Autumn Budget are now facing increased uncertainty. It seems as though the New Year may already see another Government U-turn, this time backing down on plans to scrap business rates relief for pubs that has been in force since the pandemic. This could be a real lifeline for pubs, who have warned of widespread closures due to rising rates. But, the move would still fall short of providing vital support for other hospitality businesses.

Christmas is notoriously the hospitality sector’s busiest period, but spending was down compared to previous years, which has only added to business pressures. We have already seen early casualties in this sector this month, such as TGI Fridays who recently announced further closures, which sets the year off on shaky footing.

“In more positive news, we have seen interest rates fall and GDP shows small increases for the UK economy. However, 2026 is going to be a year of change, which is going to require significant planning in order to keep up.

“AI will be more prominent in our day to day lives and cybersecurity will be high on everyone’s agenda as we move more to online. So, embracing these tech changes is essential and businesses that are agile are the ones that will survive.

“In retail, there is a real appetite from consumers for a more joined up experience from in store shopping to online and apps. In hospitality, it’s all about delivering a special experience, and in both sectors, those that deliver those experiences best, are likely to have the most success.

“All too often we see struggling businesses put their heads in the sand, hoping things will get better before it is too late. But, as ever, our message to businesses is clear: please act early if you anticipate financial trouble. Doing so ensures that more options are available for you to address business issues, 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 “A combination of political, economic and geopolitical factors has meant more businesses have entered an insolvency process this year than in 2024 as management teams ran out of fight or finance after years of trading through economic turbulence, and creditors continued to take a tough stance on chasing down debt.

“Liquidations have continued to make up the overwhelming majority of corporate insolvencies with Compulsory Liquidations reaching a number not seen in more than 11 years as HMRC has continued to pursue unpaid tax debts in an attempt to recover funds for the Treasury, and private sector creditors have followed their lead as they battle to balance their own books. While Creditors’ Voluntary Liquidations have fallen, they continue to be the most commonly used corporate insolvency process and remain well-above pre-pandemic levels.

“One issue that has hit firms hard is the increases to Employers’ National Insurance and National Minimum Wage, which came after years of rising costs, shrinking margins and cautious customer spending, and were the final straw for many firms who were struggling to stay solvent. Businesses also had to contend with inflation remaining above target levels, interest rates not falling as fast as predicted, and the ripple effect of the US tariffs which were announced at the start of the year.

“The retail industry has been one of the hardest hit, and the changes to Employers’ National Insurance and National Minimum Wage caused concern across this sector and others from the start of 2025. A bleak Black Friday and a dull Golden Quarter were a body blow for retailers at the end of a tough year, and came at a time when many were desperate for a financial shot in the arm. We expect the High Street will continue to be hit hard in 2026 as the bigger retailers cut costs and sites, and the struggling smaller ones either close or move towards an online model, and ultimately, this is likely to lead to the High Street contracting further.

“The construction industry has also suffered as rising material and staff costs became unsustainable for businesses in a sector that runs on tight margins, long payment times, and legacy contracts whose predicted profits may not materialise once the job has been completed. While the industry appears more confident about its fortunes this year, cost, labour and payment pressures will continue to affect firms as much in 2026 as they did in the previous 12 months.

“Based on the level of enquiries we’ve seen in recent weeks, we expect demand for advice and support to continue at the current volume. The new National Minimum Wage and business rates are set to take effect from April 2026, and these are likely to drive further enquiries as firms struggle to meet the imposed extra costs they will create. Retail and hospitality are likely to be most hit by this and by the constrain in consumer spending over the first three months of this year as people look to pay off the debts they have incurred to pay for Christmas.”

Linton Bloomberg, Partner, Reed Smith, said “While headline insolvency numbers may have eased in December, there are still many companies feeling the effects of subdued discretionary spending, rising costs, and wage inflation, which all play their part in creating challenging trading conditions.

“December trading is always impacted by seasonal volatility, and the weather, so caution must be exercised when considering this reduction. That’s why we should look at the longer-term trends rather than month-on-month changes, with a modest fall in insolvencies not necessarily a turning point. Comparing 2025 to the previous year shows a similar number of insolvencies and while CVLs have slightly fallen, this is more than offset by compulsory liquidations having the highest annual figures since 2012.

“Recent administrations in consumer-facing sectors suggest that distress remains very much present and these high-profile retail and hospitality insolvencies represent only a small fraction of the companies under significant pressure in these sectors and beyond. It is more likely than not that the recent trend of pre-pack administration sales will continue.”